Luton Airport's new £225m DART project will be run by a new subsidary company

Plans to create a subsidiary company to operate the £225m Luton direct air-rail transit (DART) project have won the backing of the borough council’s executive.

The proposals are in the pipeline to reduce any potential financial exposures facing the local authority’s airport company, which has to produce a business plan before any such scheme can get off the ground.

London Luton Airport Limited (LLAL), trading as Luton Rising, is the sole shareholder in the Luton DART.

It would retain the 100 ordinary shares issued to DARTCo, if the decision satisfies its external auditors.

Labour council leader and Lewsey councillor Hazel Simmons told the executive: “The Luton DART is soon to move from being a construction project to a fully operational passenger transport business.

“The board of directors of Luton Rising has taken the view that it would make sound business sense for the DART to be operated by a separate company,” she explained. “This would be owned by Luton Rising.

“That’s partly to ensure risks are controlled and limited. And more importantly for the new company to focus relentlessly on safety, security and the highest standards of customer service, free from distractions of other parts of the business.

“The creation of a subsidiary company is a matter reserved for the shareholder, which is why it’s here before us.

“The executive is recommended to agree the proposal in principle with any final approval at a future meeting of this committee being subject to Luton Rising producing a business plan examining the options.”

LLAL undertook a competitive tender process for the position of statutory auditor and PricewaterhouseCoopers LLP (PWC) mutually agreed with the airport company not to participate.

“The initial tax analysis undertaken by PWC indicates the incorporation of DARTCo and delivery of passenger services by that company would appear to be tax neutral overall,” according to a report to the executive.

“Once incorporation is agreed, further work will be undertaken as necessary to ensure this remains the case,” said the report.

“DARTCo’s share capital shall be 100 ordinary shares which shall be allotted in entirety to the airport company.

“The DARTCo Board of Directors shall consist of no more than four persons and shall include the general manager of DART, the chief executive officer of Luton Rising and two independent non-executive directors with relevant skills and expertise.

“DARTCo will need to have proven experienced staff in public transport and preferably rail, while appropriate health, safety and security support must also be in place.”

The initial cost of the Luton DART project has risen as a result of delays caused by the pandemic and its severe impact on the aviation industry.

The airport is operated by a private company, London Luton Airport Operations Limited (LLAOL), entirely separate to LLAL, under a concession agreement.