AN expansion plan is being drawn up for loss-making Durham Tees Valley Airport and will be handed to the Government within weeks.

Airport bosses are preparing a bid to the regional growth fund to develop the 250-acre south side of the airport, near Darlington, for freight services.

The application will seek to improve access to the site with a new internal road, as well as installing gas, electricity and drainage connections.

It could include new buildings.

However, Peel Holdings Ltd, the airport’s owner, is racing against time to submit the bid to the £1bn fund by the deadline of June 13.

MPs hailed the bid, revealed at a meeting with Transport Minister Theresa Villiers, as further proof of Peel’s commitment to the airport, after a turbulent period. Peel is the majority owner again, owning nearly 80 per cent of the business, with the rest in the hands of six North-East councils.

Despite an 80 per cent drop in passenger numbers in the past six years, the airport was given a big vote of confidence from airline KLM and unveiled a new marketing and investment plan.

However, it appeared the focus on freight reflects growing frustration that Government policy and the struggling economy will make it difficult to increase passenger numbers.

At the meeting, Ms Villiers was urged to cut air passenger duty (APD) and faced criticism that ministers were too focused on the South-East.

Explaining the growth fund bid, Peter Nears, Peel Holdings’ strategic director, said: “We want to open up the south side of the site for freight distribution, which is only a small part of our business at the moment.”

Mr Nears described the meeting as extremely positive, but said APD must be cut. He added: “The passenger market is very difficult at the moment.” He also criticised the Government’s focus on Heathrow and a proposed airport in the Thames Estuary, saying: “They call it a national hub, but unless it serves Durham Tees Valley and other airports, it is not doing that job.” The comment reflects long-standing difficulty in securing lucrative slots at Heathrow, an issue that Ms Villiers pledged to explore with the European Commission.

Phil Wilson, the Labour MP for Sedgefield, who organised the meeting, said: “It is obvious that the owners see a future in Durham Tees Valley and MPs will work with them to ensure that success.”

James Wharton, the Tory MP for Stockton South, said: “Everyone is pulling together to support our local airport and secure its future. There is a real consensus that we want it to succeed.”