Agenda of Airport Advisory Committee

Airport Advisory Committee 7 16 October 2019

6.1 DELEGATION TO AWARD TENDERS RELATING TO THE AIRPORT DEVELOPMENT PROJECT

STRATEGIC GOAL STRATEGIC OBJECTIVE	5. TRANSPORT Smart, connective and accessible 5.1 Public transport services that meet the needs of the community.
SUBJECT INDEX	Commercial Services
BUSINESS UNIT	Commercial Services
REPORTING OFFICER	Project Officer Contracts and Tendering - Ben Whitehill
AUTHORISING OFFICER	Director, Community and Commercial Services - Naomi Searle
NATURE OF DECISION	Executive: substantial direction setting, including adopting strategies, plans and policies (excluding local planning policies), tenders, setting and amending budgets, funding, donations and sponsorships, reviewing committee recommendations
VOTING REQUIREMENT	Absolute Majority
ATTACHMENTS	Attachment a Delegation LG3L (Attachment A)⇩ Attachment b Delegation LG3L Amended (Attachment B)⇩

OFFICER RECOMMENDATION

That the Council adopt the amended Delegation – Airport Redevelopment Project - Inviting Tenders and Rejecting and Accepting Tenders (Attachment B).

EXECUTIVE SUMMARY

Officers are seeking amendments to Delegation LG3L – Airport Redevelopment Project - Inviting Tenders and Rejecting and Accepting Tenders to increase the threshold that the CEO may accept tenders relating to the Airport Redevelopment Project so that equipment orders can be made and works progressed as soon as possible to ensure that Busselton Margaret River Airport is able to facilitate passenger services commencing on 25 March 2020.

BACKGROUND

The City has entered into an agreement to provide aviation services (aircraft movement and passenger processing facilities and services) to Jetstar Airways Pty Limited (Jetstar) for three weekly Busselton-Melbourne flights. The first Jetstar service is scheduled to arrive on 25 March 2020 and will utilise Airbus A320 aircraft.

In order to facilitate the Jetstar flights significant additional work is required including:

1. expanding the existing terminal to increase the size of the following areas:

a. secure departure lounge;

b. check in area;

c. FIFO arrival/departures area; and

d. baggage handling area;

2. supply and installation of baggage handling systems and passenger screening equipment; and

3. construction of an arrivals hall.

It is critical that the above works are completed as soon as possible to ensure that the airport facilities are ready for the commencement of services (including allowing time for operational testing and training).

The Airport Development Project has a budget of approximately $3.265 million to complete the above works.

Existing Delegation LG3L – Airport Redevelopment Project - Inviting Tenders and Rejecting and Accepting Tenders (Attachment A) allows the CEO to accept tenders up to a contract value of $1,000,000 (subject to the conditions contained in the delegation). It is expected that some of the works packages will exceed the existing delegation LG3L threshold.

OFFICER COMMENT

The City must procure the following works packages to ensure passenger services can commence on 25 March 2020:

1. Design and construction of improvements to the terminal building;

2. Design and construction of a separate arrivals hall;

3. Design, supply and installation of the baggage handling systems; and

4. Supply and installation of the security screening equipment.

Requests for tenders were issued for the baggage handling systems and security screening equipment on 9 October 2019. The closing date for submissions is 31 October 2019.

Architectural drawings for the existing terminal works are being progressed and as at the date of preparing this report, it is anticipated that requests for tenders for the terminal building and arrivals hall will be issued in the week commencing 14 October 2019, with closing dates in early to mid-November.

It is likely that the packages for the terminal building and the security screening equipment will exceed the $1,000,000 threshold for accepting tenders in existing Delegation LG3L.

The timeframes for each of the above works packages are already challenging with the baggage handling and security screening equipment orders likely to have long lead times (in the order of 14 weeks).

The City has also received advice from the architect for the terminal building that the construction timeframes are aggressive.

Due to the constrained timeframes for completing each works package officers are recommending that existing Delegation LG3L be amended as follows:

1. increasing the threshold for accepting tenders in Delegation LG3L from $1,000,000 to $1,500,000 (exclusive of GST); and

2. removing the requirement for the agreement of the CEO of the South West Development Commission (SWDC).

Amendment 1 above will allow the CEO to award contracts for each of the above works packages (subject to receiving acceptable tenders) by early to mid-November. The alternative involves preparing reports for the Council meetings on 27 November 2019 or 11 December 2019 which would leave approximately four months (including the Christmas/New Year period) to complete all works, operational testing and training.

Amendment 2 above is being requested as the original intent for SWDC approval was so that Council had potential alternative recommendations and to provide an additional level of oversight on tender decisions during the Airport Development Project. Officers are of the view that this additional level of oversight is now not necessary for the existing terminal works and implementation of baggage handling and security screening equipment required for the commencement of services in March 2020.

Officers are seeking these amendments as there is a very real risk that a failure to order equipment and commence works as soon as possible could result in Busselton Margaret River Airport being unable to facilitate passenger services commencing on 25 March 2020.

As has been the case over the duration of the Airport Redevelopment Project the Chief Executive Officer and Director for Community and Commercial Services will continue to keep Council briefed on the progress of the tenders and the project.

Statutory Environment

Section 5.42(1)(a) of the Local Government Act 1995 (Act) allows Council to delegate to the CEO the exercise of any of its powers or the discharge of any of its duties under the Act, other than those referred to in section 5.43. The Act prescribes that an absolute majority vote of Council is required.

Relevant Plans and Policies

City of Busselton Purchasing Policy.

Financial Implications

There are no financial implications associated with the officer recommendation.

Stakeholder Consultation

No external stakeholder consultation was required or undertaken in relation to this matter.

Risk Assessment

An assessment of the potential implications of implementing the officer recommendation has been undertaken using the City’s risk management framework, with risks assessed taking into account any controls already in place. No risks of a medium or greater level have been identified.

Options

The Council may decide not to amend the existing delegation. Officers advise against that course of action as there is a very real risk that delays in awarding contracts and commencing works will lead to Busselton Margaret River Airport being unable to facilitate passenger services commencing on 25 March 2020.

CONCLUSION

The amendment to Delegation LG3L is required to ensure that Busselton Margaret River Airport is able to facilitate passenger services commencing on 25 March 2020.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

The amendment of Delegation LG3L will be effective the day following the decision of Council.

Airport Advisory Committee 15 16 October 2019

6.2 BUSSELTON MARGARET RIVER AIRPORT - AIRPORT OPERATIONS UPDATE

STRATEGIC GOAL STRATEGIC OBJECTIVE	5. TRANSPORT Smart, connective and accessible 5.1 Public transport services that meet the needs of the community.
SUBJECT INDEX	Commercial Services
BUSINESS UNIT	Commercial Services
REPORTING OFFICER	Manager, Commercial Services - Jennifer May
AUTHORISING OFFICER	Director, Community and Commercial Services - Naomi Searle
NATURE OF DECISION	Noting: the item does not require a decision of Council and is simply for information purposes and noting
VOTING REQUIREMENT	Simple Majority
ATTACHMENTS	Nil

OFFICER RECOMMENDATION

That the Council recieves and notes the Airport operations report.

EXECUTIVE SUMMARY

This report provides an overview on the Busselton-Margaret River Airport (BMRA) operations and activities for the financial year reporting period 1 July 2018 to 30 June 2019 and subsequent activities up to the current date.

BACKGROUND

Following the completion of the airside, landside civil, freight hub and services construction activities in late 2018, staff focus has been directed on airline engagement, leasing opportunities and general operations.

During the 2018/19 financial year reporting period the BMRA has seen an increase in the overall passenger numbers compared to the same period for 2016/17 and 2017/18 financial years as highlighted in the table below. This is mainly due to the slight increase in fly in-fly out (FIFO) passengers flying on the Virgin Australia flights.

	Total Arriving & Departing Passengers
	2016/17	2017/18	2018/19
July	1779	1898	2163
August	2043	2301	2204
September	1840	1890	1996
October	1925	2125	2345
November	2640	2501	2047
December	2039	1804	2038
January	1857	1830	2432
February	2079	1911	2134
March	2386	2464	2497
April	1800	1949	2253
May	2260	2434	2262
June	2021	1988	2125
TOTAL	24669	25095	26496

The total number of departing FIFO services from BMRA is currently 10 flights per week utilising the F100 aircraft.

A total of 4106 aircraft movements were recorded for the period 1 July 2018 – 30 June 2019, an increase from the numbers reported for the same period in 2017/18 (3656) and a decrease from 2016/17 (4645). Increases in 2017/18 to 2018/19 can be attributed to additional Busselton Aeroclub flight training and RFDS services.

There have been increases in Emergency Services airport usage for Helitac Firefighting, RFDS, SLSWA and Search & Rescue during this reporting period. The largest increased use of the BMRA is by military aircraft with the introduction of Jet A1 fuel available. The table below includes all approved training flights for emergency services as well as emergency flights. The City does not restrict training flights for emergency services, FIFO operators and military operations.

Carpark

In May 2019 the new carpark became operational with the closure of the unsealed long term FIFO carpark.

The new car park is available 24/7 for patrons and is equipped with credit card / EFTPOS facilities and CCTV throughout for security.

Carpark usage and revenue has remained steady throughout the financial year and patronage has remained steady with the recent move to the new car park.

Hangar Leases

Following the expiration of the existing aircraft hangar leases (north and central), leases have been executed with McDermott Aviation for two hangers for the provision of aerial fire-fighting services, Helistar Aviation for two hangers to provide services on behalf of Surf Life Saving WA and Busselton Aeroclub for the storage of training aircraft.

Hangar hire agreements have also been taken up by Busselton Aero club and another private operator with seven of the 12 hangers now occupied.

City officers will continue to liaise with emergency services and aircraft owners to secure interest in the existing hangars and new general aviation precinct. To date no aircraft operators have committed to signing a hangar lease within the new GA precinct with unfavourable current market conditions for capital investment deterring proponents entering into formal leases.

International Alternate Airport

In March 2019 BMRA was designated as an alternate international airport by the Department of Infrastructure, Regional Development and Cities.

City officers have developed an MOU for airlines to use the BMRA as an alternate international airport and will continue to build ongoing working relationships with these airlines.

Qantas Pilot Training Academy

Following a national Expression of Interest (EoI) process, BMRA was not selected as the site for either of the two Qantas Pilot Training Academies which were announced in September 2018 and May 2019.

Proposed Aerofest 2020

Officers are currently in consultation with Busselton Aeroclub and CASA on the proposed Aerofest 2020 to be held at BMRA on 1 March 2020. The Aeroclub expect visitor numbers to exceed the 5000 who visited the last Aerofest in 2016.

A range of air displays similar to previous events are being finalised including the following:

§ RAAF

§ Civil aircraft

§ Parachuting

§ Formations

§ Electric aircraft

§ Streamer cutting

§ Helicopters

§ Aerobatics

This event will assist to showcase the airport redevelopment in particular the general aviation precinct opportunities for local and visiting aircraft operators.

Noise Management Plan (2019) Non-Compliance Reporting

BMRA is currently operating under the Noise Management Plan (statement 1088) approved in January 2019 by the Minister for Environment; Disability Services; Electoral Affairs.

Under the Noise Management Plan (NMP) the City is required to submit its annual compliance report to the Office of Environmental Protection Authority prior to 22 September 2019 for the reporting period of 23 June 2018 to 22 June 2019. During this reporting period five (5) out of an available twelve (12) CEO approved non-conforming activities (section 3.3.3 Approval for Non-Conforming Activity of the NMP) have been used.

No CEO approvals have been used in the current reporting period.

Corporate Event

The Airport team are currently liaising with an event organiser to hold a private corporate event with Lexus Asia at the BMRA in November 2019. Lexus Asia are requesting to use the southern apron to display vehicles and conduct vehicle test drives for a selection of invited clients only. The event will take place for 3-4 hours on Friday 15 November and coincide with the WA Gourmet Escape.

Commencement of RPT Services

At a press conference held 4 October 2019 the City and Jetstar announced the commencement of direct Melbourne – Busselton flights. Services will commence on 25 March 2020 and comprise of three flights per week, Monday, Wednesday and Saturday with aircraft arriving from Melbourne at 9.05am and departing at 9.35am. The initial fare sale price started at $89 one way and was available for the first five days. Jetstar have responded that they “have seen a terrific response from customers since the route went on sale with strong demand for seats from the local community and visitors from the east coast.” In less than a week Jetstar sold more than 3,000 sale fares and close to 5,000 seats overall.

The Airport team now have a considerable project to deliver, including terminal expansions, construction of the new arrivals hall, implementation of security screening and baggage handling equipment, as well working with industry and businesses to ensure a cafe/kiosk, car hire and tourism services are available at the airport. Work has already begun with tenders for the procurement of security screening and baggage handling systems being issued on the 9 October (closing 31 October) and expected issue of tenders for terminal expansion (design and construct contract) and the arrivals hall (design and construct contract) by 16 October 2019.

OFFICER COMMENT

FIFO passenger numbers and aircraft movements through the BMRA have increased in comparison to previous years, Officers expect FIFO passenger numbers to remain in line or slightly above budgeted forecasts for the remainder of the 2019/20 financial year.

The period has seen operational improvements, maintenance, scheduled inspections and staff training taking place including:

· Annual Aerodrome Technical inspections completed.

· Development of BMRA social media presence (Facebook, Instagram)

· Air BP aviation fuel quality control and Airport Reporting officer refresher training

· Obstacle Limitation surface rectifications

· Expansion of wildlife mitigation program

The Airport team are now planning the next phase of Airport expansion for the commencement of Jetstar services in March 2020.

Statutory Environment

The BMRA operates in accordance with the following: Aviation Transport Security Act 2004, Aviation Transport Security Regulations 2005, CASA MOS 139, Council’s Transport Security Plan and City policies and procedures.

Relevant Plans and Policies

There are no relevant plans or policies to consider in relation to this matter.

Financial Implications

Airport revenue for the 2018/2019 financial year was $1,127,024 compared to the amended budget of $1,167,100. The reason for revenue being less than expected is due to $111,000 in contributions towards airport marketing activities from surrounding local governments and tourism associations not being received as the contributions were pending an executed agreement with an airline. Excluding this, the actual revenue received of $1,127,024 is greater than the projected budget ($1,056,100) by $70,924.

Other notable revenue sources exceeding budget include; Airport hangar lease income by $10,087, Airport passenger fees by $13,560 and Airport landing fees by $12,123. The graph below shows the landing fees invoiced by Avdata for the financial year 2018/19 in comparison to the same period for 2016/17 and 2017/18.

Airport expenditure less depreciation for 2018/19 financial year is $522,215 compared to the amended budget amount of $519,650.

Stakeholder Consultation

Consultation with Department of Transport, South West Development Commission, Government agencies, airport stakeholders, Aviation Marine Security (AMS), Civil Aviation Safety Authority (CASA), Air Services Australia, Virgin Australia Regional Airline, the Busselton Aero Club, Albany, Esperance, Geraldton Airports and Australian Airports Association has been occurring on a regular basis concerning many topics and issues relating to the Airport.

Risk Assessment

Options

The Airport Advisory Committee may choose not to accept the officer report.

CONCLUSION

The airport team is looking forward to an exciting 2019/20 year with the commencement of RPT services and with airside, landside and freight hub development works completed the importance of maintaining a compliant aerodrome. Officers will continue to provide a high level of customer service ensuring the airport is operating safely and security is maintained throughout.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.

Airport Advisory Committee		8		16 October 2019
6.1	Attachment a		Delegation LG3L (Attachment A)

Airport Advisory Committee		9		16 October 2019
6.1	Attachment b		Delegation LG3L Amended (Attachment B)