Bega Valley Shire Council looks hard at direct management for Merimbula Airport

Passenger numbers have been steadily declining at Merimbula Airport.
Passenger numbers have been steadily declining at Merimbula Airport.

While the Bega Valley Shire Council continues to investigate the Direct Management model for the future operation of the Merimbula Airport its most pressing task right now is to begin the process of transferring the existing building and hangar site leases to council.

This has emerged as a matter of urgency, as while the current lessee and operator of the airport, Airport Agencies Pty Ltd, has agreed to manage the aviation operation for a further 12 months, the company has formally advised council that it is not their intention to continue with the operational lease.

In a report on Management Models Merimbula Airport included in council’s business paper for the April 16 meeting, council’s group manager infrastructure, waste & water Wayne Sartori said that council, as a matter of urgency, should begin the process of transferring existing building and hangar site leases to council.

“As this process will take some time to complete it must be actioned immediately and expeditiously if the July 2014 date is to be met.”

Mr Sartori also provided an update on investigations into the Direct Manage model as an option when the 12 month lease extension with Airport Agencies expires at the end of June 2015. Airport Agencies has indicated it is not interested in renewing the airport lease and has requested an exit strategy be prepared.

Mr Sartori said that an indicative operating budget had been developed as if council were to directly manage the airport, using its own staff, equipment and resources. “As has been workshopped with councillors there are a number of important assumptions involved including breakdown repairs, annualised plant/equipment costs and required levels of coverage.”

Mr Sartori said the estimated annual cost for a council operated facility would be in the range of $450,000 to $610,000 depending on the amount of onsite coverage and allowance for annual repairs. “This compares favourably with Airport Agencies stated cost of $580,000,” Mr Sartori said.

He said that direct comparison with other direct manage airports was difficult as each airport has its own particular features and operational requirements.

“However, by way of indication Bathurst reports $375,000, Orange $630,000, Lismore $460,000, Moruya $466,000 and Dubbo $840,000.

“On a dollar per passenger basis the range is $11 to $18 with Merimbula at approximately $12 being at the low end of the range.”

Mr Sartori listed income from airport operational activities including passenger head tax (approximately $520,000 p.a.); aircraft parking (no current charge); GA landing fees ($27,000 p.a.); terminal leasing  - café and hire cars ($12,000 p.a.);hangar leasing (approximately $20,000 p.a.) and car parking charges ($25,000 p.a.).

“Council can increase these charges or introduce new charges at its discretion,” Mr Sartori said. “However the capacity for the market to sustain such charges would have to be considered given the recent call by Rex Airlines for restraint.”

He urged councillors to note that Merimbula’s passenger charge had not changed in over five years and that passenger numbers have been steadily declining.

There was no debate on Mr Sartori’s report in the council chamber as the councillors had workshopped issues pertaining to the Merimbula Airport in a workshop earlier that day even to the point of the wording of the motion that was moved by Crs Allen and Tapscott -

1. That council approve the removal of leases from the Airport Operating lease and proceed in accordance with council’s property leasing procedure to establish direct leasing with existing tenants.

2. That council continue negotiations with Airport Agencies for the orderly transition to the future management model for the 2014/15 financial year.

3. That in finalising models for the 2015/16 year council research the Direct Management Model with the current lessee in relation to his knowledge of the operations, and other local government bodies in NSW utilising best practice in airport management and operations.

4. That council nominate the mayor and deputy mayor to join with the general manager and staff to re-enter negotiations with Rex and Qantas Link for the future use and growth of air routes to Merimbula with the objective of growing affordable passenger services to and from Merimbula.

Voting in favour were: Crs Taylor, McBain, Tapscott, Seckold, Allen and Fitzpatrick.

Against: Crs Britten, Hughes and Mawhinney.