The South Jersey Transportation Authority will pay the Port Authority of New York and New Jersey $500,000 a year to take over operations of Atlantic City International Airport.
The SJTA unanimously approved the 15-year agreement Wednesday afternoon, placing the Port Authority in control of airport operations, airport service development and marketing as of July 1. The Port Authority has the right to attempt to purchase the SJTA’s control of the airport at any time.
While the agreement allows for a near-term sale, SJTA acting Executive Director Sam Donelson said he does not believe the arrangement will take that direction. Instead, Donelson and Port Authority officials stressed that Wednesday’s approval is the beginning of a collaborative partnership.
“Air service development is certainly not a science, especially at an airport like ours, wedged in between major metropolitan airports,” Donelson said. “We are not at a place where we are able to guarantee any type of results, but I fully expect that this is going to be a successful arrangement.”
As many as six Port Authority employees could work from the SJTA’s Hamilton Township offices.
No SJTA employees will lose their jobs as a result of the arrangement, Donelson said.
The Port Authority met Wednesday at its New York City offices but was not required to vote, having already granted officials the authority to enter into an arrangement. Following the meeting, Port Authority Deputy Executive Director Bill Baroni stressed that there will be a partnership between the two agencies that will help carry out Gov. Chris Christie’s vision for increased visitation to Atlantic City.
“Gov. Christie has made it a key priority for the economic growth of Atlantic City, Atlantic County and South Jersey to have a dynamic Atlantic City airport to bring together the expertise and the knowledge of the Port Authority of New York and New Jersey with Atlantic City airport,” Baroni said. “We will build that future.”
Specifically how that future will become a reality remained vague Wednesday. Asked whether the Port Authority had a plan to target specific visitation markets, Baroni, who spoke prior to the SJTA’s vote, said it would be premature to address those questions. A $3 million study commissioned by the Port Authority suggested that increased flights to Orlando, Fla.; Fort Lauderdale, Fla.; San Juan, Puerto Rico; and Las Vegas could draw more passengers to Atlantic City.
The report did not address how plans might coincide with the goals of Atlantic City’s Tourism District created by state legislation in 2011.
Jeff Guaracino, a spokesman for the Atlantic City Alliance, which has spearheaded the resort’s new marketing campaign, said the organization has not been involved in any plans to identify new markets, though discussions with SJTA officials have taken place.
“It’s early, but we all have the same goal in mind and that’s to grow the airport,” Donelson said. “We want to make sure, and they want to make sure, that the airport subsidy is eliminated. That shows you where (the Port Authority’s) head is, where their mindset is.”
The $500,000 rate for the Port Authority’s expertise is a relatively small amount for the bistate transportation authority with a $2.57 billion 2013 operating budget. For the SJTA, however, that amount represents a significant commitment.
The airport has never turned a profit under SJTA control. In recent years, the authority has used more than $3 million in toll revenue from the Atlantic City Expressway to subsidize the airport’s approximately $15 million budget. The SJTA will still be responsible for that subsidy, yet this year fewer toll dollars are coming in.
According to SJTA data, in the first four months of the year, the number of cars passing through expressway tolls declined by more than 5 percent to 15.3 million compared to the same period in the previous year.
The arrangement with the Port Authority, including compensation, will be renegotiated every five years, with the Port Authority never receiving less than $500,000 a year. However, in years when the airport’s operating revenues exceed costs, the parties can renegotiate within 60 days for compensation for the remaining calendar year.
The situation differs greatly from the Port Authority’s takeover of Stewart airport outside Newburgh, N.Y., in 2007 when the authority took on a 93-year lease agreement. There, the authority spent millions on infrastructure improvements while air traffic has fallen 60 percent, leaving it as the only one of the Port Authority’s airports to lose money last year.
Air traffic at Atlantic City International had remained steady at about 1.4 million passengers but has fallen off pace this year. In the first four months of 2013, the airport has seen 307,426 passengers, a nearly 28 percent decline from the previous year.
Misty Pinson, a spokeswoman for Spirit Airlines, the airport’s only carrier, said the drop is a result of reduced demand following Hurricane Sandy. SJTA officials, however, said the airport has always been able to fill seats on all the planes the airport was given.
“There was a perception by the rest of the country that Atlantic CIty was destroyed by the storm, which hurt demand,” Pinson said. “In addition, we have seen a significant decrease in demand from local New Jersey residents as their vacation dollars over the four to six months have been spent on repairing their houses, businesses, etc., following Sandy.”
Staff Writer Joel Landau contributed to this report.
Contact Jennifer Bogdan:
Follow @ACPressJennifer on Twitter