Trenton-Mercer Airport has yet to Turn a Profit, btu Frontier's Success, New Revenues Help
March 11, 2014
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  • The continued success of Frontier Airlines and recent improvements at Trenton-Mercer Airport have helped increase revenues, which officials hope will erase the airport’s deficit and lead to a profit in the future.

    Small private planes, corporate jets and charter planes still account for most activity at Trenton-Mercer Airport, but Frontier’s 3 percent share in 2013 is expected to grow to nearly 5 percent this year.

    “I always thought the best use of the airport was a healthy mix of private, corporate and commercial air,” Mercer County Executive Brian Hughes said. “We were missing the third leg of the stool until Frontier came in.” Prior to Frontier’s arrival in late 2012, many smaller airlines had tried and failed to succeed at offering passenger service at Trenton-Mercer.

    Total airport revenues grew from $2.6 million in 2012 to $3 million in 2013, Hughes said. Of that $400,000 increase, $232,000 came directly from Frontier and the remainder from the newly imposed parking fees.

    The airport’s operating budget rose from $4 million in 2012 to $4.9 million in 2013, partly because of the cost of upgrading the terminal and partly because of increased costs for security, lighting and staff needed for the higher volume of airport traffic, Hughes said.

    Although expenses outweigh revenues, the airport deficit has been on the downward path in recent years.

    For fiscal year 2009, the operating loss totaled $2.6 million, according to an FAA report. It narrowed to 1.9 million in 2011 and 1.8 million in 2012. Chief financial officer Dave Miller expected that losses would continue into 2014.

    The figures, county officials warn, do not take into account the $1.5 million in property taxes collected from the airport’s tenants or the economic boost the airport activity provides to area businesses, such as hotels and restaurants.

    Hughes said he fully expects the airport to begin paying for itself through direct revenues one day. “The airport is definitely going to turn a profit, I have no doubt,” Hughes said.

    Frontier started its operations at Trenton-Mercer in November 2012 with twice-weekly flights to a sole destination, Orlando, but by June, it will have 73 weekly flights out of the airport to 17 destinations. To accommodate Frontier’s growth, the airport has since made costly improvements to the runway, terminal and parking areas.

    “That investment will eventually be fully offset by the increased revenue from parking fees and passenger facility charges, and I believe it will be sooner rather than later,” Hughes said in his county budget speech Feb. 27.

    The price tag for the terminal renovations, which included a new baggage claim facility, a larger passenger waiting area, restrooms beyond the security checkpoint and a refreshment bar, was $875,000. It will be financed by the $4.50 per passenger facility charge.

    The expanded parking and associated improvements cost $3.5 million, and income generated from parking — roughly $560,000 to date — will pay for the work. The hourly parking rate is $2 and the daily rate is $8.

    If airport business continues at the same pace, the terminal improvements will be paid off in nine months and the parking in just under two years, Hughes said.

    “The people who want to use the airport are going to be the people that pay for these improvements, which is the way I think it should be,” he said.

    The airport generates revenue through fees paid by Frontier and general aviation operators and through income from the passenger facility charge, parking, car rentals and concessions.

    Ronson Aviation, an aircraft servicing outfit; corporations like Hess, Pfizer, Merck and Johnson & Johnson; and the New Jersey National Guard and State Police maintain aviation operations at Trenton-Mercer, and they also contribute to airport revenues.

    “There’s a lot of points of revenue, but some pay much more than others,” Hughes said.

    County officials have long touted the airport as an economic engine, contributing directly and indirectly to the strength and growth of area business. It has infused the regional economy with an estimated $300 million annually and supports 2,000 jobs, officials said, citing a 2007 state study.

    At a Princeton Regional Chamber of Commerce meeting last month, Daniel Shurz, Frontier’s senior vice president, said the airline is bringing people to the region who might not have otherwise come. Frontier is making Trenton-Mercer its East Coast hub for domestic flights and has been able to capitalize on the airport’s lack of crowding and highway proximity.

    “We’re bringing people into Mercer County,” he said. “We’re making this region more accessible to more people and at low fares.”

    Although Frontier keeps the airport busy, it accounts for only a fraction of the airport’s activity, as measured by takeoffs and landings. In 2013, Frontier ramped up its service from twice-weekly flights to 49 a week. Corporate and recreational flights last year accounted for 90 percent of the activity and the remainder was made up of charters, smaller aircraft and military.

    Total flights at the airport peaked at nearly 177,000 in 1992 and then declined sharply, but activity has been increasing lately. In 2013, total flights were 80,407, according to an FAA database.

    As the economy recovers, air travel will continue to pick up among business and leisure travelers, said Anthony Sabino, an airline attorney, industry expert and professor at Peter J. Tobin College of Business in New York.

    “Commercial travel is explicitly dependent on business activity,” he said.

    While companies fly their executives in and out on private jets, Frontier makes the airport available to the general public, Sabino said. Mid-size companies that don’t own corporate jets, for example, can now send salespeople on commercial flights, and as the economy improves, more people will likely go on vacation, he said.

    “They fill up the rest of the jet with leisure travelers,” he said.

    Frontier has extended its lease agreement with Trenton-Mercer through May 20, 2018 and is establishing its first East Coast flight attendant crew base at the airport — evidence that the airline is here for the long haul, Hughes said.

    Sabino said Frontier’s continued expansion demonstrates its confidence in the region’s profitability.

    “They’re using Trenton as a smaller, less crowded hub that has the benefit of less congestion than major cities and offers easy access to the Princeton-Route 1 corridor,” he said, adding that the airline’s growth provides a boost to local restaurants and hotels.

    The county is already looking ahead should Frontier wish to further expand its operations or another airline want to add passenger service at Trenton-Mercer. More parking may be added, and the county is studying whether to clear tall objects close to the airport so that planes can take off at lower angles and conserve fuel for longer distance flights.

    Hughes acknowledged that the county may also need to build another terminal in the future.