Local authorities are planning to sell their controlling interest in Teesside Airport for £500,000.
Teesside Airport opened in 1964
The five authorities are to sell 75% of their share to Manchester-based Peel Airports Limited which has agreed to invest £20m into the terminal.
The airport has been struggling to compete against its neighbouring rival Newcastle International Airport.
Teesside Airport has been controlled by the area's local authorities since it was founded in 1964.
The deal, revealed on Wednesday, compares with the sale of 49% of Newcastle Airport, which made nearly £200m for the seven local authorities which own it.
The five Teesside councils - Darlington, Redcar and Cleveland, Middlesbrough, Durham and Hartlepool - will retain a 25% share, eventually falling to 12%.
A total of £20m in capital over the next five years is more than the local authorities could put in
David Walsh, Redcar and Cleveland Council
David Walsh, leader of Redcar and Cleveland Borough Council, said the developers could do more for the airport long term than the councils.
"There is £20m coming from Peel, that's £20m of capital to rebuild the terminal and extend it and to work on the apron.
"It will make it more attractive both schedule airliners and charter flights and give it a more more attractive identity.
"It may stop people from this area perhaps having to go to Newcastle or Leeds.
"A total of £20m in capital over the next five years is more than the local authorities could put in.
"That is the reason why we went for this partnership."
Peel Airports Limited already own Liverpool's John Lennon Airport and Doncaster Finningley in Yorkshire.
Teesside Airport handles about 750,000 passengers a year.