THE public body responsible for Cairngorm Mountain faces “tough decisions” over its future, a watchdog has warned.
Caroline Gardner, the Auditor General for Scotland, said the coronavirus pandemic “increases the uncertainty around the costs and business model required for the mountain in the longer-term”.
Audit Scotland also called on the Scottish Government to “examine the long-term sustainability of the snow sports industry in Scotland”.
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It follows long-running problems at the ski resort.
Highlands and Islands Enterprise (HIE), a government agency, has had to step in to save it twice in the last ten years after external operators ran into financial difficulties.
A new report by Audit Scotland said this “raises serious questions about the sustainability of the business operating under the current model”.
HIE is the owner and custodian of Cairngorm Mountain, and has been responsible for its management for almost 50 years.
However the private sector has operated the ski area for much of this time via a lease agreement.
Cairngorm Mountain Ltd (CML) previously operated the business but struggled financially and was taken into public ownership in 2008.
In 2014, HIE transferred the operation of Cairngorm Mountain to Natural Assets Investments Limited (NAIL), which took full ownership of CML.
But in September 2018, the funicular railway – installed in 2001 as part of a wider strategy to regenerate the Aviemore area – was closed after a routine inspection revealed structural issues, and shortly afterwards CML directors placed the company into administration.
HIE again stepped in to take over the business, securing the assets and setting up Cairngorm Mountain (Scotland) Limited (CMSL) as a new subsidiary company to operate the mountain resort.
Audit Scotland said it had "made progress in addressing some of the issues that arose under CML", but noted the new body generated an income of £243,000 between December 2018 and the end of March 2019, against expenditure of £804,000, leaving it with a deficit of £561,000.
HIE is currently entangled in two legal cases – one relating to financial guarantees provided by NAIL and its majority shareholder, and the other concerning design and build aspects of the funicular railway.
It hopes to reinstate the railway at an indicative cost of between £10 million and £15m, however its plans have been delayed by the Covid-19 pandemic.
It is also working on a masterplan for the long-term future of Cairngorm Mountain.
Audit Scotland’s report said local businesses and community representatives “emphasised the importance of the resort in contributing to an economy that is heavily dependent on tourism”.
It added: “It is vitally important that HIE and the Scottish Government considers carefully the funding requirements for any future operating model, how costs will be met, and the opportunity costs of continued investment in Cairngorm Mountain and the wider snow sports industry.
“Any future decisions, including whether public subsidies are necessary to continue operations, must take into account not only the economic benefits that the resort can bring to the Badenoch and Strathspey area but also the community, social and environmental impacts of continuing operations.”
Ms Gardner said: “HIE and the Scottish Government now face tough decisions on how to secure a sustainable operation at Cairngorm Mountain. The Covid-19 pandemic increases the uncertainty around the costs and business model required for the mountain in the longer-term.
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“Any future spending decisions need to be informed by the wide range of groups with an interest in the mountain.”
Rural Economy and Tourism Secretary Fergus Ewing welcomed the report and said its recommendations are in line with a government review carried out in 2019. He said: “Cairngorm Mountain is an important natural asset and one which has the potential to provide significant input to the Scottish economy.
“The snow sports industry is an essential part of Scotland’s rural economy, worth an estimated £30m per year and providing over 600 jobs.
“Through HIE and Scottish Enterprise, the Scottish Government has made a commitment of over £8m towards infrastructure projects since 2014.”
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