Shellharbour councillors have voted to reject bids from both companies vying to replace collapsed airline JetGo to run passenger flights out of Albion Park.
The move, at Tuesday’s council meeting, came after Corporate Air – which operates regional airline Fly Corporate – and charter service Stratus Aviation each failed to meet the council’s mandatory criteria.
These included experience operating passenger services, evidence of approval to fly from the flight regular, evidence that the company has financial resources to provide the service, and an independent financial assessment proving that the company is “deemed financially sustainable for the long term”.
Instead of going forward with the tender process to select a new flight operator, the council will “enter into negotiations with any person with a view to entering into a contract”.
The council’s general manager will be authorised to finalise the regular passenger transport contract negotiations, with councillors to approve a final “service level agreement” at a future meeting.
According to staff, this will “ensure the best value for money outcome for council”.
Mayor Marianne Saliba agreed, and said the tender rejection would give the city the best chance of establishing a new passenger flight service in a short timeframe with a reliable contractor.
“It’s highly likely we will be able to reach an agreement with one of the two companies,” she said.
“I understand the reason for rejecting the tenders at this stage and allowing the officers to negotiate. The two airlines did not address all the criteria, and it would be our downfall if we don’t allow staff to sort this out.
“We need to make sure we don’t get ourselves in the same situation that we have just been in.”
The council was left with a debt of about $400,000 with the collapse of JetGo, which was ordered to be wound up by the Supreme Court. It emerged last month that the airline had debts of up to $38 million owning to councils, passengers, the tax office and other creditors.
In supporting the rejection of the two new tenders, Cr Saliba asked general manager Carey McIntyre if direct negotiations would delay the reintroduction of passenger service.
He said it would be the intention to put an agreement in place “in the shortest possible time”. Previously, Cr Saliba has said she would hope to have flights back up in the air by about September.
Labor’s John Murray also spoke in favour of the recommendation to reject the tenders, and said he was keen to ensure there were appropriate corporate checks and a bond put in place with a company eventually selected to run domestic flights out of the Illawarra.
Independent Peter Moran also said he would support the recommendation, but was keen to see a commitment from council officers to inform the councillors if any financial aspects of the final contract were not met.
“In the event they are not paying their bills on time... I would be seeking to have councillors informed of that after a period of time so we don’t have a situation arise where invoices are not being paid for an extended period of time,” Cr Moran said.
JetGo missed its first invoice payment in January, according to the council, but its financial turmoil did not come to light until late May.
Mr McIntyre said staff would be undertaking an internal inquiry into the due diligence steps taken during the JetGo contract negotiations and would provide a report to the council in the future.JetGo missed payments just three months after Illawarra flights started