June 26, 2008

Royal Highland Show Threatens Court Action in Stand-Off With BAA Over Edinburgh Airport Organisers Complain of ‘Incredible’ Delays Organisers Complain of ‘Incredible’ Delays

By Steven Vass Deputy Business Editor

THE organisers of the Royal Highland Show have threatened that its stand-off with BAA Airports could end up in court, accusing the Edinburgh airport owner of causing "incredible" delays to the show's proposed GBP353 million relocation.

In the week when the Royal Highland and Agricultural Society of Scotland (RHASS) unveiled plans for a 10,000seater national showground to MSPs, its chief executive, Ray Jones, vented his frustration at the pace of negotiations with BAA. The airport owner agreed in 2003 to foot the bill for the RHAAS's move across the A8 at Norton Park, required for the airport's own expansion plans, But it has baulked at the removal cost demanded by the RHASS.

The dispute is embarrassing for the Scottish government, which has designated the expansion of Edinburgh airport as a major plank of its national planning framework but has so far kept out of negotations between the two parties. BAA has long insisted that the only way it can expand to meet future passenger growth projections is to take over the current Highland Show site.

Jones told the Sunday Herald: "BAA says it is struggling to put together a business case [for compensating RHASS]. We are saying, that's your problem. It's a bit late in the day to say you are having difficulties. In my view, this is all tactical stuff as part of the business negotiation."

He alleged that discussions on the move had been delayed by the rapid turnover of airport managers, with acting manager Gordon Dewar the fifth person to occupy the top job in 10 years.

The fact that there is still a vacancy for a full-time manager has put negotiations further on hold until September.

"It's incredible that we have been left to sit like this, " Jones said. "It's only in the last six months we have got around to having sensible conversations. BAA has compulsory purchase powers, but we are seen as a special case [as a showground], and in the end it might be that the land tribunal decides a price."

Senior sources at BAA hit back at the criticisms, saying the discussions had been held up for over three years until 2007 while the RHASS campaigned to remain on its current site. The sources say the RHASS has since raised its estimated cost of the move from GBP275m to GBP353m following a more detailed study.

They concede that the first estimate included a 25per cent margin of error, but say that even RHASS members had been shocked at the final fi gure.

"It's not the case that [the RHASS] writes a figure and we sign a cheque.

There are people there who don't understand how business works, " said one BAA source.

BAA's belief that the GBP353m fi gure is too high is shared by some public-sector observers in Edinburgh. One source, who preferred not to be identified, said the RHASS needed a "reality check".

What is not yet clear is what price BAA is prepared to pay to finance the move. The financially troubled airport operator, which is owned by the Spanish firm Ferrovial, was also uncomfortable with the RHASS's original GBP275m figure.

When the operator agreed to pay for the move it estimated it would cost GBP80m to GBP100m, although it now accepts that that figure was too low.

Jones said: "If the government wants us to move, it may have to fund some of the gap. We generate GBP250m of economic impact, and we believe we can double that by 2018 to 2020 by bringing larger events and conventions to Edinburgh."

This view was supported by Graham Birse, deputy chief executive of the Edinburgh Chamber of Commerce who said:

"It seems logical that, if there is a disagreement involving BAA and the RHASS, the Scottish government might mediate or make a financial contribution".

Kevin Lang, BAA's public affairs manager, said: "We have always made it clear that we can only do the move on the basis of a robust business case. We are having commercial negotiations with the RHASS and will continue to do so."

A spokesman for the Scottish government said: "The cost of the physical changes and development activity should be borne by those seeking to take up the opportunities provided by the draft national planning framework and the West Edinburgh planning framework."

RHASS's plans, including extensions to the on-site hotel and an additional hall as well as the new arena, are projected to cost a total of GBP440m. BAA has only ever agreed to fund the basic relocation.

Originally published by Newsquest Media Group.

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