Newcastle Airport will undergo a full-scale corporate restructuring after Port Stephens Council signed up to the modernisation deal with Newcastle Council.

The changes mean the airport can pay a dividend to its two parent councils, who hope to earn almost $30 million over the next decade.

The new format also allows for gradual privatisation of some airport assets, and the introduction of third-party ownership of shares.

Expansion work already planned will allow the airport to offer a wider range of regional flights, branching out to locations like Adelaide, Mackay and Cairns.

Upgrades will also include new taxi-ways and increased capacity for larger planes.