Doubts about airport transfer

Run the lease, not the airport: Wilson

Run the lease, not the airport: Wilson

'We need more discussion about the airport transfer.'

Stock image
Gisborne's airport runway. Picture by Liam Clayton

THE inclusion of Gisborne Airport in phase three of the proposed transfer of assets to Gisborne Holdings Ltd has been questioned by district councillor Graeme Thomson. The council was considering a report on progress on the asset transfer for the phase-three items, the airport, community housing, the forestry holdings and other miscellaneous property.

Mr Thomson said he wondered about handing over the airport.

'We need some discussion'

“I think we need some discussion about it before that is done,” he said.

There had been discussion about the general principle of handing over the assets and a democratic decision had won the day. But the airport concerned him. It was a highly specialist amenity-facility, it was very expensive and dealt with big business. Just taking the lease from the Eastland Group would be expensive because Gisborne Holdings would have to pay for any upgrades done. The airport still needed a new terminal, which would be expensive.

The crux of his concern was that the infrastructure company (Eastland Group) had the expertise to manage the airport and manage it well. It had the strength to ensure the airport — which was such a critical, strategic facility — would always be there. There was a risk to ratepayers in handing it over. Gisborne Holdings had a quantum of risk the infrastructure company did not have.

He did not have an issue with handing over activities like the campground but thought the council should re-evaluate the airport to ensure it was secure. He also had a concern about the sale of carbon credits for the forest estate, which could be considered asset stripping. That was all right sometimes but eventually, after harvesting, the money had to be paid back.

“We need to be assured that asset stripping is not part of balancing the books,” said Mr Thomson.

Mayor Meng Foon said the council was holding a workshop to better understand carbon credits. GHL had a policy for them.

“I am listening to you,” he said to Mr Thomson.

GHL running the airport?

Brian Wilson said he did not assume GHL would run the airport. He assumed the council would use its commercial arm to run the lease only.

“We are probably not the best people to negotiate leases for these sorts of things.”

He would be concerned if GHL was going to branch out into running airports.

“I could not imagine that I would ever agree with GHL taking on a whole new activity of running airports.”

That had been a problem with the Eastland Group when they started trying to branch out into too many different activities. When they started to run helicopters and plane-makers they eventually sat back and said: “what are our core business activities”.

“We have to tell GHL what we believe their core business is going to be. It is up to us to decide,” he said.

Pat Seymour said the impression might be gathered that the council had decided to transfer these assets but the report actually used the words “whether or not” it decided to proceed.

She felt entirely like Mr Thomson over the airport.

Community housing

In relation to community housing, Mrs Seymour said she would like the council to look at a strategic way of managing it that did not necessarily mean handing it over.

“I just want to make sure that we are all really clear, along with management, that no decisions have been made about handing them over even though they are in phase three,” she said.

There would be a good opportunity to debate each and every one of the activities in phase three. The council decided to note the report.

THE inclusion of Gisborne Airport in phase three of the proposed transfer of assets to Gisborne Holdings Ltd has been questioned by district councillor Graeme Thomson. The council was considering a report on progress on the asset transfer for the phase-three items, the airport, community housing, the forestry holdings and other miscellaneous property.

Mr Thomson said he wondered about handing over the airport.

'We need some discussion'

“I think we need some discussion about it before that is done,” he said.

There had been discussion about the general principle of handing over the assets and a democratic decision had won the day. But the airport concerned him. It was a highly specialist amenity-facility, it was very expensive and dealt with big business. Just taking the lease from the Eastland Group would be expensive because Gisborne Holdings would have to pay for any upgrades done. The airport still needed a new terminal, which would be expensive.

The crux of his concern was that the infrastructure company (Eastland Group) had the expertise to manage the airport and manage it well. It had the strength to ensure the airport — which was such a critical, strategic facility — would always be there. There was a risk to ratepayers in handing it over. Gisborne Holdings had a quantum of risk the infrastructure company did not have.

He did not have an issue with handing over activities like the campground but thought the council should re-evaluate the airport to ensure it was secure. He also had a concern about the sale of carbon credits for the forest estate, which could be considered asset stripping. That was all right sometimes but eventually, after harvesting, the money had to be paid back.

“We need to be assured that asset stripping is not part of balancing the books,” said Mr Thomson.

Mayor Meng Foon said the council was holding a workshop to better understand carbon credits. GHL had a policy for them.

“I am listening to you,” he said to Mr Thomson.

GHL running the airport?

Brian Wilson said he did not assume GHL would run the airport. He assumed the council would use its commercial arm to run the lease only.

“We are probably not the best people to negotiate leases for these sorts of things.”

He would be concerned if GHL was going to branch out into running airports.

“I could not imagine that I would ever agree with GHL taking on a whole new activity of running airports.”

That had been a problem with the Eastland Group when they started trying to branch out into too many different activities. When they started to run helicopters and plane-makers they eventually sat back and said: “what are our core business activities”.

“We have to tell GHL what we believe their core business is going to be. It is up to us to decide,” he said.

Pat Seymour said the impression might be gathered that the council had decided to transfer these assets but the report actually used the words “whether or not” it decided to proceed.

She felt entirely like Mr Thomson over the airport.

Community housing

In relation to community housing, Mrs Seymour said she would like the council to look at a strategic way of managing it that did not necessarily mean handing it over.

“I just want to make sure that we are all really clear, along with management, that no decisions have been made about handing them over even though they are in phase three,” she said.

There would be a good opportunity to debate each and every one of the activities in phase three. The council decided to note the report.

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winston moreton - 2 years ago
Cr Thomson is correct to recognise the importance of the airport and to question a proposal to hand over the asset. As he says, it is a critical strategic facility. Is this something that has been worked up by Gisborne District Council staff and if so when?
The airport is the single most strategic asset in Tairawhiti. Do not sell it for a quick dollar to entrepreneurs. Take the Queenstown option which is owned 75% by the District Council and 25% by Auckland International Airport Limited. Has anyone, perhaps our Mayor and CEO, sounded out AIAL? If not, time they did.
The surplus land in the airport apron will sustain the future commercial and industrial growth of Gisborne City - gateway to Tairawhiti tourism. Water, sewer and power are already in place or handy. The airport is more than a potential billion-dollar asset. It is an existing asset that should not be put at risk to economic management theory.
Cr Wilson is right to caution that, "Councillors may not be the best people to negotiate leases for these sorts of things." But the council can get consultancy, in this case, with a return on investment. The tenant pays lease costs.
There is a further constraint on transferring ownership of the airport. It would trigger, as happened in Paraparaumu, Public Works offer-back obligations to descendants of the original owners.