United Airlines on Wednesday became the first carrier approved for a package of financial incentives offered by Atlantic City International Airport to lure more flights to a market in the rebuilding phase.
United's one-year agreement with the South Jersey Transportation Authority, the airport owner, will give the airline a break on landing, fuel and service fees and also provides $60,000 in marketing support for its new flights to Atlantic City from Chicago and Houston.
"We hope it generates more business and more airlines will recognize that Atlantic City International is a good place to do business," Kevin Rehmann, an authority spokesman, said of the incentives deal.
Rehmann noted that United is the first airline to take advantage of the program. Other airlines would be eligible for similar incentives in return for starting new domestic or international flights to Atlantic City.
The airport's financial package is separate from a $5 million airline subsidy program approved Tuesday by the Casino Reinvestment Development Authority, the state agency that oversees the Atlantic City Tourism District. The CRDA program would protect airlines from the financial risk of launching new service by buying up a certain number of unfilled seats on flights to Atlantic City.
Atlantic City is looking to rebuild its air market after an 18 percent decline in passenger traffic last year blamed on the lingering effects of Hurricane Sandy. Overall, the airport handled about 1.1 million passengers in 2013.
Frank Frankowski, interim executive director of the South Jersey Transportation Authority, reported Wednesday that airport traffic has been on the rise this year. Passenger traffic jumped nearly 21 percent in March and is up more than 12 percent for the first three months of 2014 compared to the same time last year, he said.
The launch of United's new flights from Chicago and Houston on April 1 and Spirit Airlines' March 20 start-up of seasonal service to Boston have given the airport a boost. Atlantic City Mayor Don Guardian disclosed earlier this month that another airline may start service this summer from four cities. He would not reveal the airline's name.
Currently, air travelers represent just 1 percent of Atlantic City's nearly 27 million annual visitors. Atlantic City tourism officials, government agencies and the casino industry are counting on more air travelers to replace some of the day-tripping gamblers lost to rival casinos in neighboring states in recent years.
"Enhanced air service brings more visitors to Atlantic City and helps attract more conventions and meetings to Atlantic City," CRDA Executive Director John Palmieri said in a statement. "This can be a catalyst to achieving one of the threshold initiatives of the Tourism District."
Airline incentives have become commonplace as cities nationwide vie for more flights in the ultra-competitive travel industry. This is not the first time the South Jersey Transportation Authority has offered airlines financial packages, but the CRDA's new $5 million subsidy program represents an entirely new level of funding support to attract air service to Atlantic City.
Tony Marino, an independent transportation analyst and former Atlantic City Expressway executive, praised the CRDA and SJTA for stepping up their efforts to attract airlines, but he questioned whether the carriers will stay in the market after the financial incentives stop.
"It can't hurt, but the measure of success is not how many carriers will accept subsidies to start flights into Atlantic City International, but how many of those flights will still operate after the subsidy ends," Marino said.
Marino added that in the past, other airlines pulled out of Atlantic City once the incentives dried up.
"We know from past subsidy ventures that the success rate has been zero so far," he said.
One key point, Marino stressed, is whether new airline service will actually bring the highly coveted conventioneers and overnight visitors to town. If not, the subsidy programs will have fallen short of their goals, he argued.
Recent improvements to the terminal and other air facilities mean that the airport itself can no longer be blamed for suppressing passenger traffic or scaring away potential airlines, Marino said.
"Unfortunately, on the negative side, while Atlantic City International was being upgraded, Atlantic City, as a destination magnet for visitors, went in the other direction," he said.
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