No change to Merimbula Airport management....for now

There will be no change to the management of the Merimbula Airport for now. 

The lease is due to expire on June 30 this year, but the lessee, Merimbula Airport Agencies Pty Ltd will be offered a further extension of  the lease for up to 12 months.

It was always going to be a tight deadline for the council to decide which of the four options it would adopt given the procedures involved and when the Direct Management model was thrown into the mix, which requires significant investigation, it scuppered the tight timeline.

Under the Direct Management model council would employ professional and operational staff to directly manage the airport’s operation and development. Council bears all risks and responsibilities.

At council’s meeting on Wednesday, February 12 it was resolved on a motion put by Mayor Bill Taylor and Councillor Michael Britten that council note the staff report that recommended the lease option be retained; that council receive a further report on the direct management model outlining the likely potential income and operational expenses and resources for council; and that the council has further consultation with the current lessee, airport users not limited to MAUG (Merimbula Airport Users Group) and other operators of the airport to gain a full understanding of the items that should be considered for the comparing model.

And that the council resolve to negotiate with the current lessee to extend the current lease from June 30 for up to 12 months and ensure adequate provision is made for contribution to the maintenance reserve under Cl8.4 of Appendix A of the lease.

Councillors arrived at the afternoon council meeting with the wording of the resolution decided as they had extensively workshopped the issue of the airport management that morning and this was reflected in the small amount of time to given to debate during the meeting.   

Greens councillor Keith Hughes wanted to know whether there was adequate provision for contributions to the airport maintenance reserve fund in the lease.

Council’s group manager infrastructure waste & water Wayne Sartori said: “The head tax is paid to the lease holder who pays council a fee plus an amount in the reserve, the amount that is placed in the reserve is supposed to be recommended by the leaseholder each year as to what the appropriate amount was.” This information drew an outburst of laughter from the councillors.

“The biggest problem is the lease.” - Cr Sharon Tapscott

Mr Sartori continued, “That amount has stayed fixed except half way through the lease, the lease holder increased the amount for two years by choice, and doubled it but now the amount contributed has gone back to what it was originally.”

Cr Sharon Tapscott said: “The biggest problem is the lease.”

Cr Tony Allen said he would “reluctantly” support the motion. He said while he recognised the right of councillors to require more information on the direct management model, he considered that it might be a fruitless exercise.

“The reality is at the end of the day, I firmly believe that the council should not be running a business 24/7. I am sure the appraisal of that model will show the airport has limited passenger throughput of about 35,000 a year, limited income and limited profit. I am disappointed we are procrastinating again - we have to make a call.  I hope the present lessee is happy to go with the proposal for another 12 months.”

The motion was put and carried.

Crs Hughes and Fitzpatrick voted against.

MANAGEMENT OPTIONS

The four management models up for consideration

1.      Directly Manage (DM): Council employs professional and operational staff to directly manage the airport’s operation and development. Council bares all risks and responsibilities.

2.      Contract Manage (CM): Council engages a qualified and experienced company to operate the airport. While the extent and scope of the contract terms and conditions may vary significantly, this option is essentially a fee for service.  Council transfers some of its responsibilities but ultimate responsibility and risk rests with Council.

3.      Lease Agreement (LA): Council lease the airport to a qualified and experienced company to operate the airport. Again, the extent and scope can vary significantly, but Council, depending on those conditions, is able to transfer some operational and financial risks. This option includes variations which could include the lease of the airport operations (runway, terminal and associated areas) and the airport business lands as separate parcels.

4.      Private Ownership (PO): Council sells the airport and relinquishes ownership to a third party and thereafter has no further responsibilities in regard to the airport. Most but not all risks are transferred to the third party.

Prior to consideration of these management models, it is worth clarifying the context in which the airport currently operates and will operate in the future. The importance of each area and Council’s risk profile will make clearer the collective metrics for decision.

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