The Defence Department is to review air traffic control services at Newcastle Airport, following the eleventh-hour scrapping of a Civil Aviation Safety Authority-sanctioned proposal for the airport to operate without radar over the Christmas period.

Mr Smith said the airport was busy enough to warrant the investment in a tower, which he believed would cost about $500,000 a year, or about 50 cents per airport passenger.

He said any "proper" review of the airport would identify the need for a tower, which would provide a permanent solution to the provision of air traffic control given that defence was unwilling to provide civilians access to its radar while its personnel were on a month-long standby over the Christmas period.

Airservices Australia should provide air traffic control if the RAAF did not have enough air traffic controllers, Mr Smith said.

Defence controllers co-ordinate passenger flights on weekdays from the RAAF control tower. A defence-certified air-ground radio service is provided on weekends and has been in place throughout the most recent standby.

This radio service is considered a step down from air traffic control because aircraft co-ordinate their own "self-separation", although they are overseen by a defence radio operator with access to radar, who advises on airport traffic when necessary.

An airport spokesman said it would discuss the matter with defence when the standby ended this week.