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Melbourne Airport has backed down from its demand for an underground station for the airport rail link, ending a stalemate with the Victorian government and clearing the path for the overdue project to proceed.

The state government has insisted building a station above ground in Tullamarine would be cheaper and faster, and accused the airport of deliberately trying to sink the project, while the airport had argued that an underground station would future-proof the connection.

But Melbourne Airport has decided to compromise to get the rail link done.

The Allan government, blaming the stand-off with the airport, delayed the project in May by at least four years to 2033.

Melbourne Airport is now hopeful the project could be ready by 2030.

The declaration appears to end the impasse that has put the rail link in doubt for more than a year and leaves the government with no further reason to delay. However, compensation to the airport for the acquisition of the land could become a sticking point.

The airport expects to receive redress for the use of part of its land, leased from the federal government and which would be acquired by the state. Chief executive Lorie Argus told The Age she hoped this could be easily resolved.

“We are genuinely empathetic to the challenges that the state is facing. So we want to do that as cost effectively as possible. We’re definitely not going to be difficult in this process,” Argus told The Age on Sunday.

“We’re going to be really pragmatic and realistic about expectations on the station on our side, and we understand the position they’re in from a cost perspective. Obviously, getting us back on track also means the funding needs to recommence.”

Melbourne Airport had accused the government of abandoning negotiations in April last year.

The state government referred the project to a Commonwealth review of infrastructure projects around the country, delaying work and angering MPs in the north-west. Federal Transport Minister Catherine King ultimately ruled it should go ahead.

The federal and state governments have each committed $5 billion to the project. A business case for the $10 billion to $13 billion project in 2022 considered both above- and below-ground stations.

Melbourne Airport just last month pledged to continue its fight for an underground station after mediator Neil Scales, who was appointed by the federal government, recommended the station should not be built below ground unless the operators could show it made commercial sense.

Victorian Transport Infrastructure Minister Danny Pearson has said a below-ground station would cost billions more, cause more disruptions, and take an extra two years to deliver.

He has blamed the delays on the airport for pursuing the underground station, which he said did not stack up.

“We’ve spent three years trying to reach an agreement with the airport, and we’ve been blocked and frustrated at every step of the way by the airport because of its fixation on a below-ground solution,” Pearson told reporters on Friday.

The airport still prefers an underground station but said it had compromised to support growth when a third runway, awaiting a final sign-off from the Commonwealth, opens in 2030. About 45 million passengers a year are expected to fly through the airport by then.

Argus said the Scales report had found traffic congestion was worse than the business case predicted in 2022, making the case for the project even stronger.

“So our view now is we need a public transport link. Victoria needs a public transport link. I think everyone agrees we need a train, and we don’t really want to find ourselves a couple of years down the road still debating our end. We’d rather accept the compromise, move on and make sure it can be delivered.”

About 18,000 workers also commute to the airport.

Delays to the rail link have become a sore point for Labor in the western suburbs because of a perception the government has prioritised major infrastructure projects in the east.

The government, which rebranded the airport rail link “SRL Airport” at the 2022 election, has locked in major works contracts for the $35 billion first leg of the Suburban Rail Loop in the east.

Deputy Premier Ben Carroll in May declared it was time to get the rail link done and that he would not leave parliament until the promised Keilor East station in his electorate of Niddrie was delivered. Last week, standing alongside Pearson, he announced the government had secured the land for that station “to fix a 100-year access gap” for residents in the north-west without trains.

The state government is yet to respond to the airport’s compromise. The Age was restricted from contacting third parties, including the government, as part of the announcement.