The financially troubled Cairn Gorm funicular railway will be in public hands after development agency Highlands and Islands Enterprise agreed to take on ownership of the operating company.

The Cairngorm funicular
Zoe Grice

The controversial railway, the construction of which was opposed by the Cairngorm Campaign, was opened in 2001. Campaigners say the project’s financial plight shows it should never have been built.

HIE said a declining domestic ski market has hampered plans to diversify its operations, which have also been frustrated by huge debts. Yet this winter was CairnGorm Mountain’s best for years, with a full six months’ of skiing continuing right into May. The resort had just over 62,000 skier days – about 37 per cent of the total Scottish ski market. Before the funicular was built, the Cairn Gorm resort was seeing 150,000 skier visits per year.

HIE already owned the railway and land, now the Bank of Scotland, a major creditor, has agreed for the agency to take over the operating company too. Its management will later be put out to tender.

Douglas Yule, HIE's director of operations said: “We're pleased to have reached agreement with all parties and thank them for the part they've played in developing this superb and successful facility over the last seven years. We'll now be meeting with stakeholders to draw up plans which can secure the sustainable future operation of the funicular railway.

“We are also delighted to be working with the team at CairnGorm Mountain Limited, who have done such an excellent job of managing this year-round visitor attraction. CML has continued to provide opportunities for Scottish skiing and, with strong partnerships, ensure the facility remains at the forefront of environmental sustainability, whilst continuing to support the tourism industry in Badenoch & Strathspey and the wider Highlands.”

Bob Kinnaird, chief executive of CML said: “The level of stability that this new arrangement will provide has to be good news for everyone with an interest in the continuing success of CairnGorm. Without HIE's direct involvement and intervention, none of this could have happened.

“We will clearly be working closely with HIE management over the next few months in evaluating options, setting goals, prioritising projects and adapting the facility so it continues to secure interest from the wider market that it serves in addition to winter sports.

“However, as far as the day-to-day operation goes, it will be very much a case of business as usual at CairnGorm for some time to come. Later on, and in the interests of transparency and best value, tenders from parties interested in procuring the right to operate the facility will be sought.”

But the Ramblers’ Association in Scotland called for a halt to any more public spending on the project. Director Dave Morris said: "Our view is that this was inevitable and there must be an investigation by Audit Scotland into the whole history of financing this project.

“HIE should not be allowed to invest any more public money in it until that investigation has been completed and the Scottish Parliament has had the opportunity to scrutinise its findings. An absolutely huge sum of public money has been spent on this, but when it started its life it was supposed to have been private-sector led. We always held it was built in the wrong place.

“The top station should have been at the lower end of the Ptarmigan Bowl, away from the European designated sites, then they might not have had to have a closed system which prevents people getting out at the top. It might have succeeded then.”

Drennan Watson, convener of the Cairngorms Campaign, said his group had employed an accountant to examine CML’s books. He said: "They show it has no significant assets and an overall deficit of £5.4m, and that it can only continue operating through the ongoing generosity of Highland Council, HIE, Moray Badenoch and Strathspey Enterprise – which are all taxpayer funded – and the Bank of Scotland, each of which is waiving interest, rent or voting rights.

"Without these subsidies and support, the company would be unable to meet its obligations, and would be heavily insolvent, and therefore forced to cease trading."

Walkers can only get the funicular downhill. For conservation reasons, walkers cannot exit the system after travelling up on the train.

Proponents of the Cairn Gorm resort say it will only become economic if it diversifies into more summer activities.