Government releases update on regionalization of air services

Works, Services and Transportation Minister Percy Barrett today released an update on the status of the regionalization of government�s Air Services Division from St. John�s to Gander.

The Department of Works, Services and Transportation will enter into a long term lease arrangement with General Aviation Terminal Inc. for Hangar 22, which has the necessary office and hangar space to house the Air Services Division. The adjacent Hangar 21, which the department currently leases from Transport Canada, will still be used for storage of water bombers.

"An analysis of our options revealed that leasing Hanger 22 is the better option financially than renovating Hangar 21 and it reduces our need to borrow capital funding and incur the accompanying interest," said Barrett. "By choosing this route, government also has some assurance over cash flows required given that lease payments are essentially fixed. So from many aspects, this is the better arrangement."

The lease contains one 10-year term, with two five-year options. Leasing costs are approximately $672,000 annually for the first 10 years, and then approximately $340,000 per year for the following 10 years. This includes some operations and maintenance costs and an upgraded fire suppression system, which is required by the provincial fire commissioner.

Works, Services and Transportation officials investigated what space was available and it was determined that the only hangars suitable in Gander, of the size necessary to accommodate the aircraft, were Hangars 21 and 22. Interest was expressed by another party but it did not have the 44,000 square feet required for air services operations. The department also determined the cost of constructing a new building would be significantly higher than leasing.

"We�re glad to be able to make this investment in Gander, as it will benefit many individuals and businesses in central Newfoundland. Gander is becoming a strong, viable aviation centre and we are excited to be a part of that," said Barrett.

Media contact: Lynn Evans, Communications, (709) 729-3015.

2001 06 01                                                      7:30 a.m.