In 2001 Burnie City Council in Tasmania received a disturbing report about its regional airport. Lionel Young, who is the Council’s Manager Business Development and now a director of the airport, said the report showed declining patronage and poor operations. The airport was likely to close if these trends were not addressed. Burnie City Council decided to step in, ultimately deciding to buy and run the airport.
Today the situation has turned around with a 43 per cent increase in passenger movements. Sustainable annual operating profit levels have been achieved in the past two years and it is expected the airport will reach 100,000 passenger movements this year.
The airport has continued to go from strength to strength. Qantaslink announced last month that it was increasing seat capacity by 36 per cent and introducing its new 50 seater Dash Aircraft from August 23. REX Airlines is the other competitive carrier.
Located in Wynyard, the airport is a vital interstate and intrastate air transport link for Far North West Tasmania.
After the release of the 2001 report, Burnie City Council convened discussions with the airport owner, the Burnie Port Corporation, and other councils in the Far North West Region, to ascertain the best way forward. The Port Corporation accepted that the current operational position was poor, and that it would prefer to sell the airport on full commercial terms for $4.9 million. Due to financial constraints, the other councils elected not to join Burnie with the purchase.
Burnie City Council was determined to proceed in the interests of securing the long term future of the airport and to secure the flow on community benefits. Burnie Council was faced with many challenges, not the least managing a new function that departed well away from its past roles and functions.
“It was a difficult time as the Council had not had any previous airport involvement or experience,” Lionel Young said. “It was also hard on the heels of the Ansett collapse and the terrorist events of September 2001.”
Notwithstanding these factors, Burnie City Council was committed to moving forward with the purchase late in 2001, and successfully negotiated a lesser purchase cost of $2.5 million. A key aspect was to promptly seek out a business partner to share the risk, and to provide Burnie City Council with airport management and technical expertise. It found such a partner in Australian Regional Airports, and negotiated the sale of a 49 per cent interest, leaving Council with a controlling 51 per cent interest.
Burnie City Council played an active role in researching and developing the purchase proposal, identifying a business partner, developing the corporate business model, arranging the capital and financing arrangements, undertaking community consultation, and setting up the ownership transfer and the operational aspects of the business.
Lionel Young said buying the airport confirms that councils can act in initiatives beyond their own municipal areas, provided the initiative will realise benefits for its residents.
“We have shown that a local Council can demonstrate leadership and commitment and can recover a major business operation from serious decline to a profitable and sustainable level,” he said.
Burnie City Council took out the community development award at the 2004 Local Government Association of Tasmania (LGAT) Awards for Excellence with this initiative. For further information contact Lionel Young on (03) 6430 5723.
