Wednesday, September 19, 2012

South Jersey Transportation Authority will cut subsidy to Atlantic City International Airport (KACY) by $1.3 million

Atlantic City International Airport can no longer afford to rely on a steady stream of revenue from the Atlantic City Expressway to subsidize its operations, officials said Tuesday.

The South Jersey Transportation Authority, which operates the airport and the expressway, took steps Tuesday toward reducing this year’s $6.2 million airport subsidy by $1.3 million, with long-term plans to continue lowering the subsidy.

Officials originally planned for nearly 39 percent of this year’s $15.9 million airport operating budget to be supplemented by expressway revenue. Instead, the SJTA voted Tuesday to make the changes to the agency’s operating budget after acting Executive Director Sam Donelson presented a revised forecast of the airport’s finances.

Savings will be realized from a $350,000 increase in parking revenue at the airport’s garage and from cuts in expenses as the agency opts not to fill vacated positions. AvPORTS, the contracted company that runs the daily operations at the airport, has also agreed to an indefinite 10 percent cutback in its annual administrative fees. The cutbacks together total $919,000.

“This is not an exercise in paperwork. We’re talking about structural changes to the way the airport subsidy will be used in the future,” Donelson said.

The authority has relied on toll revenue to keep the airport afloat since the SJTA was created through a merger of agencies in 1991. The authority was meant to bring cohesiveness to what officials then called a disjointed regional transportation system.

In an effort to rescue the struggling airport, revenue generated by the expressway would be used to offset costs, states the legislation that created the authority.

But that subsidy should be smaller, SJTA officials said. In 2011, the subsidy accounted for nearly 25 percent of the agency’s $14.9 million operating budget. The year before that, the subsidy accounted for 21 percent of a $15.2 million budget.

Donelson’s plan to reduce the subsidy this year relies, in part, on not filling some of the agency’s vacant positions, including two firefighters. Freezing those positions will not compromise safety, as SJTA meets the Federal Aviation Administration’s staffing requirements, Donelson said..

Other savings will come from cuts to snow-removal costs realized last winter. Donelson said all of the adjustments are “very conservative.”

Meanwhile, Spirit Airlines — the airport’s only carrier — has gradually shifted toward larger planes, meaning more passengers and more parking revenue. While some destinations have been eliminated, the flights in place are full and are bringing in more passengers, as evidenced by the increase in parking revenue the agency is on track for, Donelson said.

About 148,000 passengers traveled through the airport in August, an increase of 9 percent over the same month last year. That boost led to a 7.3 percent increase in airport parking for the month, data show.

“We expect passenger counts to continue to increase, and that along with the other savings should mean we can eventually reduce the subsidy even more significantly, but that will take years, not months,” Donelson said. “We’re fortunate that SJTA has been able to use that subsidy, but we want to keep it as low as possible as the airport continues to grow.”

The SJTA has long hoped to increase flights at the airport. Perhaps the most promising opportunity could come through the addition of international flights, which the airport will be equipped to handle with the opening of an expansion project in October. An airline, which SJTA officials declined to name, has requested to meet with officials about providing international service, Donelson said.

“You look at that airport right now and it’s the only option for revitalization that Atlantic City has,” Commissioner Joseph Devine said. “The only way Atlantic City will be successful is with the airport.

If (state leaders) want to give it to someone else in the future that’s fine, but right now, it’s ours.”

Last year, discussion of a possible sale of the airport to the Port Authority of New York and New Jersey emerged as a means to bring in larger carriers. Language in the legislation that created the Atlantic City Tourism District establishes a format for distributing the proceeds of a sale of the airport among six South Jersey counties served by the SJTA.


No comments: