The move means the proposed $1.5 million upgrade can be funded entirely from the airport's revenue stream and government grants.

In 2008, council developed an airport masterplan providing for a new terminal as well as extending the runway, installing new lights and improving access from Collina and Lake Wyangan.

But council's airport management committee has decided that simply extending the terminal can achieve the same objective at considerably less cost, according to its chairman Peter Fussell.

"We'll probably spend $1 million to $1.5 million and achieve the results we want, which is a substantial increase in the size of the terminal," councillor Fussell said.

"If we can budget for it from our own income then we don't have to call on council's own resources, which are a bit stretched at the moment.

"It'll save the community more than a million dollars."

The terminal was built in 1971 when just 20,000 passengers passed through it annually.

Now, with the introduction of the Griffith to Melbourne service, that figure is up to 72,000 people a year and the outdated terminal cannot cope.

"The terminal and some of the blue plastic chairs in that terminal go back to Airlines of NSW which is about 40 years ago," Cr Fussell said.

"But it's not just about looks. We'd like to increase the apron size because if the Melbourne flights down the track increase in frequency or if there's a problem at the airport we can't fit more than two planes on the apron at the moment."

Council's governance, administration and compliance manager Duncan McWhirter said improvements to the airport were well underway, with nearly $1 million spent extending the runway from 1520m to 1720m.

"We're also in the process of doing some flood study works because traditionally in rainfall events a lot of water runs down from Scenic Hill and through the golf course and into the aerodrome precinct," Mr McWhirter said.

"It can cause damage to the infrastructure out there, which we want to avoid, and plus it has caused inconvenience and damage to some of the hangers out there."