CAIRNGORM Mountain may no longer be able to rely on skiing and other snowsports to make money, auditors have warned. 

Stephen Boyle, Auditor General for Scotland, said the resort's recent history showed neither the private nor the public sector have been able to avoid losses.

Climate change and variable weather is having an impact, auditors said, and the coronavirus crisis has only added to difficulties.

It came as it emerged negotiations to reinstate the funicular railway, which has been closed since 2018 due to structural issues, are at an "advanced stage". 

Cairngorm Mountain has suffered long-running problems.

Highlands and Islands Enterprise (HIE), a government agency, has had to step in to save it twice in the last 10 years after external operators ran into financial troubles.

Earlier this year Audit Scotland raised "serious questions about the sustainability of the business operating under the current model" and warned of "tough decisions". 

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.

Following the closure of the funicular railway, 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 previously 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.

Speaking to Holyrood's Public Audit and Post-legislative Scrutiny Committee, Mr Boyle said the sustainability of the business model is "very, very challenging". 

He said Cairngorm Mountain is a "vital asset" to the local economy and the wider winter sports industry, but its commercial success is dependent on good weather conditions and previous operators have all suffered financial losses. 

Its performance has been "further hindered" by the closure of the funicular railway.

He told MSPs: "I think history has shown us that it has been very challenging for private operators to make this a successful commercial venture, given that in the past 12 years we've had two commercial failures in terms of running the mountain with winter sports as the integral component to derive profit."

He said there is now a need for a long-term masterplan for "what is a key asset for the country, but one that may not be able to rely on winter sports as the key provider of economic returns".

He added: "The model that existed pre-Covid wasn't able to deliver a profit or survive without public subsidy. 

"The inclination of people to travel, to engage in sporting activities with social distancing requirements, makes it all the harder. 

"So any really preconceived expectations of how the service will be enjoyed will have to be revisited in light of what Covid will mean and the additional challenges that were obviously clearly unwelcome as it related to a business model that was already under pressure."

He continued: "It goes without saying that Covid has enormous implications for this industry."

Mr Boyle said neither the private nor the public sector have been able to deliver a model that breaks even. 

He added: "The model to date has relied on the provision of winter sports services. 

"The masterplan and its thinking, therefore, to deliver an alternative economic return, may need to think much more widely and differently about what the future service provision on Cairngorm Mountain is."

Graeme Greenhill, senior manager of performance audit and best value at Audit Scotland, told MSPs: "Climate change is having an impact. There's a lot less snow than there used to be. 

"I think it's highly likely that the other ski resorts are suffering as a result of that, and they're having to think about how they operate in future."

Mr Boyle said HIE has been "really clear" that its preference is to reinstate the funicular railway. 

The estimated cost of reinstatement is £10-15 million. But even removing the railway would cost £13.3m, excluding professional fees.

Auditors suggested it could take two years before the railway is back up and running. 

Mr Boyle said HIE could fund part of its reinstatement but would also be looking for financial support from the Scottish Government. 

Mr Greenhill told MSPs: "There is a final business case. We haven't audited it, but the final business case was considered at HIE's July board meeting. 

"It confirms that reinstating the funicular is still the preferred option. 

"I'm led to believe that negotiations with a contractor to carry out the work are at an advanced stage."