Huge airport opportunity for Fed council

By Robert Muir

Federation Council hopes to decide next Monday if it will enter into a long-term lease agreement of Corowa Aerodrome with Amber Aviation for a pilot training academy which has the potential of employing 150 staff.

Council is working towards finalising a lease and presenting a report for council’s extraordinary meeting next Monday, June 29 which has been previously planned to adopt its draft 2020/2021 budget.  

At yesterday’s monthly June on-line video conference, councillors agreed yesterday to defer the listed item on council’s agenda, while council staff continue working towards finalising a lease.  

The business model for Amber Aviation (AA), predicts that by year seven, AA would train up to 500 students annually and employ 150 staff.

A capital investment of $20 million by year seven, 177 direct jobs associated with the business establishment (150) and via construction activities (25) by year seven, 90 indirect jobs created through the increase in economic activity (based on the multiplier effect after seven years) and increased annual retail expenditure of $8 million at year seven – these are projected benefits by Federation Council staff if the business proceeds.

Further predictions by council’s economic development staff based on the initial essential economics assessment include an approximate increase of 10% to the council area’s gross regional product, increased accommodation expenditure from staff and students of $4.75 million (year seven), a reduction (saving) in annual maintenance costs associated with the aerodrome, estimated to total $2.7 million over the initial 34 year period (two by 33-year optional leases) of the lease, as they will become the responsibility of AA.

“When all these outcomes are factored in, and allowances are made for increased rates and other charges it is estimated that the lease of the airport represents an economic gain to Federation Council of $37.4 million over the initial term of the lease,” Federation Council’s director corporate and community services Jo Shannon said in her report before yesterday’s meeting.

Council previously invited expressions of interest for the long-term lease of the Redland Road Corowa land, following on from the unsuccessful bid to be considered for the flight school to be established by Qantas. 

“The property has been purpose zoned and developed as a commercial aerodrome. After significant negotiation with the preferred proponent, council is now in a position to consider entering into a formal lease agreement with the proponent Amber Airports Pty Ltd (AA) for the establishment of a Pilot Training Academy,” Ms Shannon said.

In December 2018, council resolved to enter into an exclusivity and confidentiality deed with AA. PDC Lawyers prepared the deed and approval was given to council officers to commence negotiations regarding the key terms of an agreement for a long-term lease of the Aerodrome. A draft agreement to lease was subsequently prepared. 

In February 2019 council resolved to authorise the Mayor and General Manager to finalise all other Agreement to Lease and Lease matters with the
proposed Lessee and present a final Agreement to Lease and Lease to Council, for consideration as soon as possible. On 19 March 2019, Council resolved to accept the details of the terms listed in the report and incorporate them into the draft agreement to lease and lease.

On 22 October 2019 council approved AA an extension of time to seek an education provider partner and authorise the replacement of personal guarantees. On 22 November 2019, council and AA entered into an agreement to lease. 

Since then negotiations have been ongoing with council staff and the mayor meeting with AA on 28 February 2020 to discuss further changes to the lease. Subsequent to these discussions, on 17 March 2020 council approved a further extension to the agreement to lease to allow both parties to clarify and finalise a number of issues prior to entering into a formal lease from 1 July 2020. 

As negotiations have progressed, there have been difficulties for AA in attracting a suitable training partner. Currently, AA has undertaken their own registered training organisation accreditation, which means that they can undertake the theory with their own instructors.

Whilst this arrangement allows the training to occur on site straight away, AA will continue to source a key partner over the longer term. Because of these developments, the need to engage an education provider, as a requirement of the initial agreement to lease document has not been carried forward into the final lease, and it is important that Council are made aware of this. 

Council at its March 2019 meeting resolved to endorse a grant application of $2.5 million to improve tarmac conditions and other associated works. Council staff have submitted applications for $4 million, to undertake this work to both the Building Better Regions Fund (Round 4) and the Regional Airports Program (Round 1). Council staff are now aware that both of the applications have been unsuccessful. 

Since these applications were submitted, an assessment by the Civil Aviation Safety Authority (CASA) has resulted in the need for staff to take remedial action to both runway 05/23 and 14/32 the aprons and taxiways. This resulted in works totalling $561,158 being undertaken. A re-evaluation of the scope of works and costings has now identified that a further $436,348 is required to bring the tarmac up to the standard required by CASA. The remaining required funds have been included in the 20/21 draft Long Term Financial Plan; however, staff will continue to advocate to State and Federal Governments for grant funding for this amount.

“Council staff have undertaken a comprehensive risk assessment and have taken appropriate steps to ensure that any issues have been considered and mitigated as far as practicable.” 

Community groups/other users 

Ms Shannon said the lease clauses are considered to adequately protect the interests of other groups operating on land within the proposed lease allotment, being the Rural Fire Service, and the Corowa Cougars Rugby League Club. 

“Ultimately it is council’s desire to subdivide off those areas into two new allotments and entre into separate lease agreements with those two entities,” she said.

“Council has ensured suitable clauses are in the lease agreement that does not require the Council to meet the costs of the replacement/renewal of any of the assets at the airport once/if the lease is enacted. 

“Council will be aware that the Army periodically operates from the airport, and use the Jump Shack as a base. AA has been encouraged to actively pursue this arrangement to see if the Army would be able to continue to use this site into the future.”

The lease has the potential to be a significant injection into the economy of Corowa and the region according to Ms Shannon. 

“This lease would enable a new business into Corowa, at an underutilised airport, with the very real potential of other related businesses within the aviation industry to also be created as a result,” she said.

“If the company develops to the extent of its ultimate plans, the positive economic benefits are considered to be substantial. As with any venture, it naturally contains risks that will continue to be managed, and reported on to council where required.”