Elite Airways President and CEO John Pearsall said last week his executives were continuing to negotiate with Vero Beach officials, who are seeking a new three-year agreement under which the airport fees the Maine-based airline pays annually would more than triple.
Pearsall refused to comment on the city’s proposal, saying only that he hopes the matter will be resolved soon.
However, when asked if the fee increase could prompt the airline that provides the airport’s only commercial air service to leave Vero, Pearsall replied: “I’m not saying that.”
According to a Nov. 22 memorandum from Vero Beach Airport Director Eric Menger to City Manager Monte Falls, Elite’s annual fees would jump from $8,400 to $38,625 under the new agreement – an increase the airport figures it needs to cover the costs of having commercial airline service at Vero Beach Regional Airport.
Menger said last week the increase was “not unreasonable” and should not be considered a “big cost” for a commercial airline, even though it calculates to a 360 percent price hike.
“Percentage-wise, it seems like a huge increase, but that’s only because the fees were so low in the original license agreement,” Menger said. “We offered low fees as a start-up incentive to get them here. Also, we didn’t know exactly what our expenses would be, because we hadn’t had commercial air service in 20 years.
“They started here in December 2015, and this is the first increase we’ve sought,” he added. “Even with the increase, the fees are still relatively low. For a commercial airline, $38,000 shouldn’t be a big cost.”
If Elite signs the agreement, Menger said he expects Elite simply would pass along the cost to customers who fly into and out of Vero Beach, primarily on year-round routes to and from Newark, New Jersey, and Portland, Maine, and on seasonal flights to and from Asheville, North Carolina.
With Elite averaging more than 18,000 such passengers the past two years, the additional cost to passengers would be less than $2 per ticket. As of last week, though, Menger said airline executives were “still balking at the price.”
The City Council, which was expected to approve the agreement at its Dec. 3 meeting, removed the item from the agenda because Elite hadn’t signed it. Menger said he hopes to put a signed agreement before the council next month.
“Elite knew this was coming and they’re working on it,” Menger said. “I’m sure they’ll try to get it lowered, but I think they’ll take a closer look at it and realize they’re still getting a very good deal here.
“We don’t charge very much, compared to other airports, and we provide a lot of consistent and loyal passengers who pay a higher-than-normal fare because they want the convenience Elite provides.
“They’ve been here four years now, and they’ve said their flights between Vero Beach and Newark is their best route.”
The city has proposed increasing the licensing fee it charges Elite from $8,400 to $20,625 per year and implementing an $18,000 annual fee for two ticket counters. The agreement also would allow the city to impose additional charges, such as fees for landing, ground-support equipment and passenger facilities.
Menger wrote in his memo that the new agreement would be retroactive to Dec. 1 but wouldn’t take effect until July 1 “to give the airline time to adjust to the new proposed fees.”
He wrote that the airport spent $350,000 to renovate the terminal building, adding that the city pays roughly $80,000 annually for overtime and part-time airport staff, as well as $96,000 for police services.
The airport also spent $18,000 for a passenger loading bridge, Menger said. Elite-related expenses also include other ground-support equipment and repaving projects.
“We don’t want to lose Elite, and we’re certainly not trying to drive them away,” Menger said. “They provide a huge benefit to our community. We want them to do well and we want to continue working with them.
“But the airport is an enterprise fund for the city,” he added. “We have to operate as a business and be self-sufficient. We operate on the revenues we take in. There are times we can give incentives on a short-term basis, as we did here, but, once they’re established, we need to charge them what we need to cover our expenses.
“Also, if Elite starts adding flights, our expenses will go up. This agreement allows us to charge more to cover them.”
Menger said he has encouraged Elite executives to expand service and add destinations, perhaps to markets in the Midwest, possibly Cleveland – home of Cleveland Clinic, which has taken over management of Vero Beach’s hospital.
While Elite’s jet service to and from Vero Beach produces a claimed annual economic impact of $8 million for Indian River County, Menger said the airport’s expenses continue to rise.