by Bradley Parsons
Staff Writer
Jacksonville Aviation Authority Executive Director John Clark sees his airport’s profit-sharing deal with a private developer as a step toward a new business model.
The deal would allow Majestic Realty to infuse retail development into 325 acres around Jacksonville International Airport. The Aviation Authority would split the profits equally with the developer over the 65-year term of the lease.
The deal has generated controversy among other developers who think the deal should have been bid out through an open, noticed, public bidding process. But Clark told a City Council committee Monday that the deal represented an evolving business plan aimed at making the JAA financially self-sufficient.
Clark said airports everywhere are looking for new revenue streams. With airlines struggling and government financial support dwindling, Clark said airports can no longer count on those sources to pay the bills.
“The old business model is to just pass on costs to the carriers,” said Clark. “But now we’re seeing where carriers are pulling out of communities. We’re working toward becoming a low-cost airport system to try to be competitive.”
Carriers pay about 30 percent of JIA’s operating costs now. That’s competitive with other southern airports, but Clark said he wants to shrink their share of the cost to about 25 percent. Private partnerships like the one envisioned with Majestic will help the JAA defray those costs, he said.
“Carriers like JetBlue and Southwest, that’s what they look for,” said Clark. “Low-cost systems allow them to keep their keep their costs low.”
Council member Suzanne Jenkins said she worried about the duration of the lease. She asked Clark if the private development might not interfere with future expansion plans.
Clark said the JAA could buy out Majestic’s lease if the land was needed for expansion.
Jenkins said the Council may still want the City to share in the JAA’s profits from the deal.
“If the airport was losing money they would come to us for help, as they should,” said Jenkins. “But we should be in the loop when their ship comes in.”