ATLANTIC CITY — Hoping to lure new carriers to Atlantic City International Airport, the state authority controlling the city’s Tourism District is prepared to pay out $5 million in airline subsidies.
The Casino Reinvestment Development Authority on Tuesday voted to devote funding to a risk-abatement program, allowing airlines to compete for grant funding — likely in multiple rounds.
Unlike airport operators bound by Federal Aviation Administration guidelines dictating how subsidies be can used, the CRDA’s funding has no such restriction capping the amount an airline can receive over time, Executive Director John Palmieri said.
The funding will reduce the risk an airline would assume in adding routes to Atlantic City, as the authority would agree to “buy” a certain number of unfilled seats on each flight for a certain period of time. Any incentives will be performance-based, he said.
“Depending on the number of routes they might be looking to add, we could be looking at a couple of million to one carrier,” Palmieri said.
Officials acknowledged that untested smaller airports, such as Atlantic City International, are at times problematic business propositions for new carriers. Continuing to land new air service is crucial to developing the city’s midweek convention market, they said.
A state report that preceded the creation of the Tourism District called for increasing convention business 30 percent per year for five years. Officials have called those goals lofty and instead point to more modest strides. Data released earlier this week show that in the first quarter of 2014, the number of shows hosted at the Atlantic City Convention Center remained flat compared to the first quarter of 2013, but the number of delegates who attended shows rose 9 percent to 21,219.
Mayor Don Guardian said the approval Tuesday followed interest expressed by multiple airlines. The hope is that those airlines will add routes, helping to make the city more attractive to convention markets.
Guardian declined to name the parties in play but said he’s hopeful the CRDA incentives will bring at least one new carrier in a number of months.
“There’s one in the works that we’re hoping may be able to make it for the summer,” Guardian said.
New air service is part of the strategy to bring in more business travelers and overnight visitors to Atlantic City to replace some of the day-tripping gamblers who have been lost to rival casinos in surrounding states.
The Port Authority of New York and New Jersey, the agency that operates six airports in both states, took over operation of Atlantic City International last July from the South Jersey Transportation Authority in hopes of attracting more airlines.
The Port Authority scored an early coup by signing United Airlines to launch daily flights from Chicago and Houston to Atlantic City on April 1. Port Authority spokesman Ron Marsico said the CRDA’s incentives program will provide an additional boost.
“The Port Authority applauds the Casino Reinvestment Development Authority’s embrace of renewed efforts to attract new carriers to Atlantic City International Airport,” Marsico said in a statement. “CRDA’s unprecedented $5 million contribution to this program will help the Port Authority and the South Jersey Transportation Authority market Atlantic City International in a cooperative, coordinated initiative to the advantage of the resort city and surrounding region.”
CRDA officials said they will look to the Port Authority for assistance in evaluating any proposals received. On Thursday, the authority’s board also adopted a set of standards by which proposals will be evaluated. A request for a copy of the guidelines was not provided as of press time.
Palmieri said the authority expects to solicit proposals in trade publications within “the next couple of days.” More funds could be allocated for incentives in the future if the authority is successful is attracting new carriers with early rounds of subsidies, he said.
Staff Writer Donald Wittkowski contributed to this report.
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