AC Airport will be OK, regardless of Spirit - JetBlue deal fallout, analysts say

“Let’s say it does occur, and as a result JetBlue decides to not service the airport anymore (if it won’t support costlier flights). It would obviously be a tremendous loss, but I don’t think it would last very long,” said Anthony Marino, a transportation analyst who formerly worked for the South Jersey Transportation Authority.

Based on the numbers he’s been monitoring for the last 30 years, Marino said, two other national low-cost discount airlines, Allegiant and Frontier, would probably immediately vie to provide similar service at ACY.

“Spirit has proven over the years that there is a built-in market of approximately one million passenger trips between ACY and Florida markets, Myrtle Beach, Atlanta, and Boston annually on a low-cost airline,” Marino said.

The SJTA owns and operates the airport, and spokesperson Kimberly Testa said its staff continues to seek expansion of service.

“Spirit has reached out to us on the potential JetBlue acquisition,” Testa said. “However long the acquisition process entails, it will be ‘business as usual’ at the airport with the SJTA always looking to add additional markets.”

Spirit’s customers are mainly locals traveling to Florida, and Floridians with ties to the area traveling north to visit friends and family, Marino said. Spirit has not tended to attract a lot of casino tourism travelers.

Now Spirit has added flights to Puerto Rico, and Marino says the growth area for ACY may be flights to Central American destinations that immigrants to the area would use to visit friends and family from their home countries.

That said, Marino says it’s unlikely the Spirit-JetBlue deal will go through, given the federal government’s opposition to further consolidation in the airline industry.

The airport and region could benefit if JetBlue’s service succeeds here, said Jane Bokunewicz, faculty director of the Lloyd D. Levenson Institute for Gaming, Hospitality and Tourism (LIGHT) at Stockton University.

“While it is unlikely the resulting airline will be able to maintain Spirit’s ‘ultra-low-cost’ model, a blending of the two could result in a relatively low-cost product with higher customer satisfaction,” Bokunewicz said in an email response to questions.

Spirit is the only commercial airline flying into and out of ACY, with flights to various points in Florida, Myrtle Beach, South Carolina, and Boston.

American recently started a service from ACY, but passengers are bussed to flights out of Philadelphia International Airport.

A new No. 5?

If the merger happens, it would create the fifth largest airline in the nation with the potential to offer a competitive, lower-cost alternative to the four major airlines — American, Delta, Southwest and United, Bokunewicz said.

Much will depend on how the company would decide to structure its business plan.

Like hotels, airlines set their prices using algorithms based on supply and demand, timing of purchase, and peak vs. off-peak flight times, Bokunewicz said.

“The airport’s current patrons may resist higher airfares, but a better quality product might potentially attract new patrons and expand use of the airport to guests who might not have previously considered it,” she said.

A stronger brand and broader service area would be a significant asset to Atlantic City and, in particular, the growing business of meetings and conventions, Bokunewicz said.

Marino disagreed about ACY being a good match for regular-priced flights.

“The history has shown there is no market for a regular-cost airline,” Marino said. “There have been attempts to bring regular airlines in. They quickly go away.”

Several attempts at subsidizing airlines like United and Air Canada failed, Marino said, due to the lack of a customer base.

“They (regular-cost airlines) make money from business travelers willing to pay full cost,” Marino said. “The low-budget traveler to Disney World is looking for whatever deal they can make to take a family of four or five people to Florida as cheaply as possible.”

The per-passenger revenue at ACY is one of the lowest nationwide, Marino said, in profit per seat.

In 2018, ACY ranked 349th among 350 U.S. airports, with an average yield per passenger mile of only $15 per seat, according to the federal government’s Airport Fare and Yield Report.

The national average yield in 2018 was $118, and the median was $213 per seat, a fact Marino used in a 2020 op-ed for The Press of Atlantic City.

The casino factor

He sees expansion of charter service as a more likely growth opportunity.

“That’s where the casinos come in,” Marino said. “Now we have four of the nine aggressively trying to revitalize the charter market with VIP casino gamblers to Atlantic City.”

Borgata, Caesars Entertainment, Hard Rock Hotel & Casino Atlantic City and now Ocean Casino Resort are seeing some success with charters.

“In May (charters were) up over 300%, but that was on a small base,” Marino said. “If it widens ... that will help both the airport and the casino industry in general.”

Lauren Moore, of the Atlantic County Economic Alliance, is hopeful the airport will be attractive to Spirit or JetBlue, if the merger goes through, as a place to expand service and for maintenance of its fleet once SJTA builds facilities on undeveloped land.

“We have reached out to JetBlue and Spirit CEOs with a letter letting them know we are available to chat if they want to talk about expansion plans and how we may be able to help,” Moore said.

So far, no talks are set.

At its last meeting, the SJTA passed a resolution giving its executive director, Stephen Dougherty, the authority to negotiate a contract with Industrial Realty Group, of Los Angeles, to develop the airport’s northwest quadrant for aeronautical services.

That company was the only one to respond to a request for proposals earlier this year. Moore said IRG wants to build facilities for both cargo operations and maintenance facilities.