Wagga City Council says it "cannot afford" to meet new security requirements at Wagga Wagga Airport unless the deal surrounding the ownership of the facility is reworked.
Council general manager Peter Thompson, manager of council businesses Daryl Woods and councillors Dan Hayes and Rod Kendall spoke to the Senate's Rural and Regional Affairs and Transport committee last week.
During the meeting, Mr Thompson said an entirely new building would need to be constructed to house the screening equipment required by new legislation.
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Mr Thompson said council would struggle to afford this due to the unique nature of the airport's ownership which regularly sees it miss out on grants and upgrades.
"Our immediate need is for the federal government to take a reasonable approach to our airport in regards to meeting the requirements of the screening," Mr Thompson said.
"We'd like it to be recognised that we are in a slightly different situation to all the other large regionals that are putting in screening equipment because they are enjoying funding from the state government that is not coming to us because it's a Commonwealth asset."
Councillor Kendall echoed this sentiment and called on better terms to be agreed on the next lease, with the current 30-year deal set to expire in three years.
"Frankly we cannot afford to do that airport terminal extension and install the required security arrangements for the Federal Government," Cr Kendall said.
"One of the most critical current needs is the finalisation of a new lease for the airport ... it needs to be a long-term lease with a long-term option so the necessary investment can occur."
Council has been pleading with the federal government to rework the current agreement for the past year.
Wagga City Council is one of two NSW councils that does not own its airport and instead leases it off the Department of Defence for about $200,000 each year.
But Mr Thompson said the airport in Williamtown, which is also owned by the federal government, has received $60 million in federal funding since 2005 to improve assets while Wagga's has received only $2.5 million.
The federal government has proposed a 99-year lease of the airport for Wagga City Council, but it has not yet been accepted.
"We've said unless we can get the Commonwealth government to support this community with adequate funding of the airport, we will leave it to the Commonwealth to find someone else to operate the airport for them," Mr Thompson said.
"Financially it's not sustainable for us to keep propping up the airport..."