The British and Irish Governments are to provide three quarters of the money needed for an extension to the runway at Derry City Airport, it was announced today.
Northern Ireland Secretary Peter Hain said an agreement had been reached with Dublin under which both would contribute equally to a grant of stg£14 million (€21.2m) to airport owner Derry City Council.
The council will pay the balance of the cost of the project which is estimated to be £19 million (€28.8m). The work will involve the extension of runway safety areas, installation of new equipment and purchase of land to remove obstacles at the western end of the runway.
The demolition of the 'obstacles' - 17 family homes - has created controversy and opposition to the project.
The usable length of the existing runway has been restricted on safety grounds by the Civil Aviation Authority, thus limiting the size of aircraft that can use it and the number of passengers they can carry.
At one stage Ryanair threatened to pull out of the airport unless the work was carried out to enable it to put larger aircraft on the route.
Announcing the funding Mr Hain said: "The airport is a vital piece of infrastructure, not only for the city, but for the economy of the whole North West region stretching into Co Donegal.
"This partnership approach is an excellent example of how the two governments can work together to improve facilities which will benefit people and businesses on both sides of the border."
In March 2005, both governments declared their support in principle for the airport project - subject to Derry City Council meeting a number of conditions.
Among them was a requirement that the council change the governance arrangements of the airport so that it could operate on a more effective commercial basis.
Mr Hain said: "Good progress has been made towards fulfilling the pre-conditions and we are pleased to put the final touches to a joint offer of grant aid.
"There has been significant passenger growth at the airport over the last year and the grant project should help to improve business prospects further by enabling full use to be made of existing runway facilities."