A few years ago the director of the US's Rocky Mountain National Park visited the Cairngorm funicular and was asked if they would construct something comparable in his neck of the woods. His reply was an emphatic "No".

"There is only one thing you know for sure about any piece of technology, and that is it will go out of date," he said. "So we have a rule never to put in anything you are likely to take out and, looking at the concrete in that railway's construction, you'll never take that out."

His remarks are recalled this week by the Cairngorms Campaign, a pressure group which fought against the establishment of the Cairngorms Funicular for more than a decade on environmental and economic grounds.

The Rocky Mountain man's comments, say the campaigners, are worth remembering as they believe the funicular saga reflects a failure to learn from past mistakes.

Their view was reinforced yesterday as Highlands and Islands Enterprise (HIE) is preparing to take over the funicular's financially troubled operator, CairnGorm Mountain Ltd (CML), to safeguard the future of the £20m railway and the Cairngorm skiing operation.

For Drennan Watson, convener of the Cairngorms Campaign, the news came as no surprise. His group, he said, had employed a senior accountant to examine CML's accounts. "They show it has no significant assets and an overall deficit of £5.4m, and that it can only continue operating through the ongoing generosity of Highland Council, HIE, Moray Badenoch and Strathspey Enterprise - which are all taxpayer funded - and the Bank of Scotland, each of which is waiving interest, rent or voting rights.

"Without these subsidies and support, the company would be unable to meet its obligations, and would be heavily insolvent, and therefore forced to cease trading."

Of the takeover by HIE, Mr Watson said: "This is a clear admission of the failure of the whole project. Yet another example of an ill-considered plan creating unnecessary conflict."

Of conflict, there has been plenty - from the proposals for major westward expansion of downhill ski development into the Northern Corries and Lurcher's Gully in the 1980s; to the funicular in the 1990s which was taken to the Court of Session by environmentalists concerned at the impact on sites protected by European environmental designations. But the funicular finally opened in December 2001. Following the news of CML's difficulties and HIE's plans, Dave Morris, director of Ramblers Scotland, said the authorities had to take action.

"Our view is that this was inevitable and there must be an investigation by Audit Scotland into the whole history of financing this project. HIE should not be allowed to invest any more public money in it until that investigation has been completed and the Scottish Parliament has had the opportunity to scrutinise its findings. An absolutely huge sum of public money has been spent on this, but when it started its life it was supposed to have been private-sector led. We always held it was built in the wrong place. The top station should have been at the lower end of the Ptarmigan Bowl, away from the European designated sites, then they might not have had to have a closed system which prevents people getting out at the top. It might have succeeded then."

Mr Morris called for the transfer of the 3500-acre Cairngorm Estate from HIE to the Forestry Commission, a move that has been mooted. One-third of the estate, which HIE's predecessor the Highlands and Islands Development Board, was given by the Scottish Office in 1971, is leased to CML.

The first financial move was made yesterday when Highland councillors agreed to HIE's proposal to cancel the £1m loan it made to CML in 2001/02. They had waived the interest charges and few expected repayment.

Council convener Sandy Park said: "The council recognises the importance of the Cairngorm Mountain operation and the jobs it creates. We support the action by HIE to ensure the sustainability of the business and it was on this basis the council has agreed to sell our loan to HIE for £1."

But it is the council's public sector partner, HIE, which is most exposed having invested almost £17m of the total £19.7m costs. It owns the railway and associated buildings and the land they stand on. Four years ago it reduced the rent it charged CML from more than £500,000 a year to £100,000, much of which remains unpaid.

HIE's strategy is to come to an agreement with the CML's other creditors, particularly the Bank of Scotland (£3m plus), before taking ownership of the company with a view to putting its operation out to tender in the long term.

Douglas Yule, HIE's director of operations, said: "We're pleased that Highland councillors have agreed to release CML from this long-standing debt obligation.

"Their decision plays an important part in efforts to stabilise and develop the long-term sustainability of the funicular railway and the recognised benefits it brings to the Highlands."

HIE was hopeful that it could reach agreement with the Bank of Scotland to allow it to take ownership of CML. The bank would make no comment, but Bob Kinnaird, chief executive of CML, said he supported the proposal to transfer ownership to HIE, rejecting suggestions the company was on the verge of liquidation.

A company insider said: "Our problem is that our balance sheet is not improving. We have legacy of debt of £3.5m even from before the funicular. We had to revise our business figures when the funicular was being built, from 150,000 skier days to about 110,000 but nobody dreamt we would be down to an average of 51,000 skier days.

"If it hadn't been for that I don't think we would be having this conversation. This season was good, with 61,000, but we have got to look to continue to diversify in the face of the climate change and to do that we need investment.

"We can't get investment with our balance sheet. But the funicular is successful. We are doing 148,000 non-skiing visitors a year, but all we are doing when we make money is service our debt."

There were plans to create alternative visitor attractions, including a mountain environment education centre.

The present CML management confirmed they would tender to continue operating the funicular and ski slopes if HIE took over.

Mr Watson said that was not something he would oppose.

He said: "The standard of management in CML is the best and most environmentally conscientious there has been. Staff/customer relations have been transformed."

Another who expressed an interest was Graham McCabe, who led the management buyout of the Glenshee ski centre in 2004. He said: "We have always been jealous of the public investment in Cairngorm, so we would be interested in putting our expertise to good use up there."