COMMUNITIES Secretary Eric Pickles has decided not to list a former aircraft factory in York city centre, dealing another blow to hopes of turning it into a 1930s visitor attraction.

Reynard’s Garage in Piccadilly, where aircraft manufactuer Airspeed was based in the 30s, was put up for sale by City of York Council last year as part of moves to regenerate the area.

One of the nine bids received involved the Yorkshire Air Museum in a scheme to create an exhibition about the 1930s, including aviation but also speed, fashion, design and film.

But council leader James Alexander said last November there had been “significant” interest in the building from hotel chains and it was likely to become a four-star hotel with business conferencing facilities.

Now Mr Pickles has turned down an application to designate the site as a listed building.Conservationist Alison Sinclair described the decision as ‘very disappointing', as it was difficult to see how the old garage could survive if the site was to be sold for a hotel.

However, she said the structure had been listed as a Building of Merit in a City Centre conservation area appraisal carried out for the council in 2011 and this had to be a 'material consideration' in determining any planning application for the building.

It had also been one of the earliest nominations on York’s Local List of buildings of historic interest, on account of its connections with the aero industry, which would be another material consideration.

She suggested discussions between the Air Museum and the council, which were broken off last year, might now be restarted, adding: "The Airspeed exhibition in the original premises would be a completely appropriate and satisfactory solution for the future of the old building."

Museum director Ian Reed said it would still be interested in pursuing the idea of a 1930s exhibition, which would include aviation history and a plane placed on display, if the council was prepared to discuss the matter.

A council spokeswoman said the Secretary of State turned down a listed building application as there were insufficient grounds. "The council is therefore continuing with the process to select a developer for this site," she said.

"The remainder of the points raised will be dealt with as part of the planning process when the time comes."