Liberty Island Ferry Operator Gets Ten-Year City Contract without Competitive Bidding
The City’s Department of Parks and Recreation has awarded a ten-year contract to Statue Cruises to provide ferry service from Lower Manhattan to Liberty and Ellis Islands, without competitive bidding. At a May 15 joint hearing between the Parks Department and the Mayor’s Office of Contract Services, the proposal to re-award this contract was approved without discussion or debate.
Statue Cruises has been the operator of this service for more than a decade. A parallel federal 10-year contract between Statue Cruises and the National Park Service was re-awarded last August and began this past March.
The terms of the City’s agreement stipulate that Statue Cruises will pay the City the greater of either $2.5 million or ten percent of gross receipts for each of the first five years, and $3.0 million or ten percent of gross receipts for the second five years.
According to the Statue of Liberty/Ellis Island Foundation, approximately 4.3 million visitors took Statue Cruises ferries to visit these national monuments in 2023. The website for Statue Cruises notes that ferry tickets cost $25 per person, with discounts for seniors and children. This seems to indicate that Statue Cruises will gross more than $100 million per year on the concession it has been awarded.
The rationale cited by the City’s Parks Department for not engaging in a competitive bidding process for this contract is, “the National Park Service (NPS) and Statue Cruises are parties to an agreement by which Statue Cruises provides ferry services to the Statue of Liberty National Monument and Ellis Island from the Battery. Statue Cruises is the only ferry operator licensed by NPS to operate at the Statue of Liberty and Ellis Island. Since NPS is the only entity with power to grant access to the Statue of Liberty and Ellis Island, and Statue Cruises is the sole ferry service with an agreement with NPS to provide said service, Parks has determined that a competitive solicitation,” is not possible.
The NPS has not disclosed the terms of the contract it recently renewed with Statue Cruises, but its prior agreement with the company, which ended in 2023, required that fees of 21 percent of gross receipts be paid to the federal government. If a similar revenue split is contained in the new agreement, this appears to mean that Statue Cruises will pay approximately $20 million per year to the National Park Service and $10 million annually to the City Parks Department, on overall revenue of slightly more than $100 million. Deducting 30 percent from the $25 price of a ferry ticket to Ellis and Liberty Island means that Statue Cruises will likely gross approximately $17.50 per passenger, per trip.
Statue Cruises is a subsidiary of Hornblower, which also operates the heavily subsidized NYC Ferry system. For comparison, a 2021 audit by the City Comptroller’s office found that the NYC ferry system was granted an average subsidy of $12.88 per passenger, per trip, in addition to the fare (at the time) of $2.75. This indicates that the total cost of each passenger trip on NYC Ferry is roughly $15.63.
Assuming that the cost of operating the Liberty and Ellis Island ferry is comparable (although its route is much shorter than most NYC Ferry trips), this may mean that Statue Cruises clears roughly $2.00 in profit for each passenger trip. If Statue Cruises’ operating expenses are closer to that of the nearby Staten Island Ferry (which is free, but costs taxpayers approximately $5.50 per passenger trip), its profit would rise to $12 per passenger trip. The first scenario would give Statue Cruises roughly $8 million per year in profit, while the second would imply approximately $48 million in profit
Last February, Hornblower declared bankruptcy, after revealing that it lost more than a quarter of a billion dollars in 2020, and came within days of shutting down entirely in November 2023. The firm is also more than billion dollars in debt, and spends in excess of $100 million per year in interest alone on these obligations.