Port Authority Shatters Passenger Records, But Earnings Won’t Erase $3B COVID Loss

Port Authority officials reported record-breaking activity and financial results for the first quarter of 2023, but the bi-state agency said it is still feeling the effects of a $3 billion revenue loss during the COVID-19 pandemic.

The agency reported $1.5 billion in gross operating revenue was earned in the first three months of 2023 — 15% higher than same period in 2022, said Elizabeth McCarthy, Port Authority chief financial officer. The agency earned $597 million in net revenue after operating expenses of $902 million were deducted. That was $123 million more than earned in the first quarter of 2022.

“When we look at the results verse budget, we are pretty much right on budget, just slightly above,” McCarthy said at Thursday’s board of commissioners meeting. “It’s very strong from a revenue perspective.”

The top performers were bridge and tunnel revenues, more recovery in airport earnings and passenger volumes and continued strong performance at the Port of New Jersey and New York, she said.

Aviation, which is forecasted to be the authority’s top revenue earner after expenses for the year, hit a record for highest passenger volumes in the Authority’s 102-year-history, officials said.

“The airports handled a record high number, serving over 1 million passengers over the first quarter 2019 record volume,” said Rick Cotton, executive director. “That is the highest volume handled in a first quarter ever in 100 years.”

Despite being please to see the recovery, Cotton said the authority continue to “examine and reexamine” its multi-year capital plan, which is affected by the revenue loss between 2020 and 2022. The pandemic hit the authority hard, cutting into travel and passenger volumes at key facilities that are counted on heavily for revenue.

This year, passenger volume records were set at Newark and LaGuardia airports, he said. Airport volume was at 103% of 2019 levels and 4% higher than budget projections, McCarthy said.

Traffic volumes at the authority’s bridges and tunnels between New Jersey and New York also were at 103% of 2019 levels, helped by a mild winter, truck traffic and a toll increase that took effect in January, she said. The Tunnels, Bridges and Terminals department is forecast to be the agency’s second highest revenue earner in 2023, according to the budget.

“TBT hit the highest first quarter since 2008 and traffic volume was up over 3% over 2019,” McCarthy said.

In 2023, aviation is projected to earn $1.524 million in net revenue after operating expenses, making it the agency’s top revenue earner according to 2023 budget documents, followed by Terminals, Bridges and Tunnels with a $1.349 million net revenue forecast.

The port also continues to be among the nation’s three busiest, despite a slowdown in cargo shipments amid concerns about a recession and seasonal adjustments, Cotton said.

Port Authority ports outpaced Long Beach ( California) for second busiest port in the county in the first quarter, he said.

While the first quarter performance demonstrates “strong recovery and resilience” from the activity and revenue downturn experienced during the pandemic, “the $3 billion revenue loss has not gone away,” Cotton said.

The effects are being felt in the authority’s capital plan for major projects, he said.

“Our capital planning occurs years in advance and extends over a 10-20-30 year period,” Cotton said. “COVID knocked us down.”

While pleased to see the increased activity level at airports, bridges and tunnels, he said the capital plan financing growth line is still down, compared to where it would have been without the pandemic.

“There will be and have been delays in some of our capital projects,” he said. “That’s what we continue to examine and re-examine.”

Unlike public transit systems across the nation, only the authority’s airports received any federal coronavirus relief funding from two aid packages. Of the $433 million allocated by the American Rescue Plan Act to the authority’s airports, $54 million had to be shared with airlines and $60 million with airport concessionaires, financial statements said.

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Larry Higgs may be reached at [email protected].

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