New York Water Taxi says it could go out of business in the face of the city’s new ferry plan, amid expectations that Hornblower New York will land the contract for subsidized citywide service.

“We cannot continue competing against free,” New York Water Taxi co-presidents Helena Durst and David Neil said in an e-mail Thursday to their 200 employees, which was also provided to the online magazine Politico New York. In the letter, Durst and Neil said they will start winding down their 15-year operation in October, if they lose their own bid to provide citywide service.

The company has diversified from commuter service to marketing itself in travel, tourism and private partnerships to be less reliant on city subsidies. But if Hornblower has both the Statue of Liberty route, plus the citywide service, “we cannot continue to viably operate…The Citywide Ferry will undoubtedly carry at least 50% tourists with a city subsidy as the East River Ferry does now,” Durst and Neil wrote.

Based in Brooklyn’s Red Hook section, New York Water Taxi carries around 1.5 million passengers annually.

Officials from the New York City Economic Development Corporation (EDC), who will choose a winning bidder for the citywide service in the coming weeks, expressed surprise over the letter, and challenged the assertion that their new system will compete directly with New York Water Taxi routes.

"We're surprised to hear New York Water Taxi is threatening to cease operations if not selected as operator for Citywide Ferry Service, especially since Citywide Ferry will not directly compete with any of their routes,” EDC spokesman Anthony Hogrebe said in an emailed statement. “We believe there is room in our city for multiple ferry operators providing many different types of services, and we're disappointed that Water Taxi does not share our commitment to the future of New York Harbor. We continue to work towards launch of Citywide Ferry Service, which will create more than 150 new good jobs for New Yorkers."

In early 2015, Mayor Bill de Blasio unveiled the plan for expanded citywide ferry service, based on the success of the East River ferry system that began in 2011. That crossing exceeded all expectations, carrying 1 million passengers in its first year with a city subsidy that came in lower than expected at $2 a ride.

Business magazine Crain’s New York has reported that Hornblower is the odds-on favorite of the EDC, and the pushback from other harbor operators has taken on a home towners-vs.-interloper flavor because of Hornblower’s San Francisco roots.

The East River ferry experience clearly shows that tourists and recreational riders use the subsidized service, New York Water Taxi contends.

“New York would be better served by requiring subsidized recreation riders to pay competitive fare-box rates, while giving commuters free or reduced fares,” the letter says. “Unfortunately, our logic has not prevailed.”

Ostensibly the New York Water Taxi letter is addressed to employees but it bears a clear message to customers and city officials as well. The company contends it has been squeezed for years because of a lack of city government support, and portrays the impending citywide contract decision as a last straw.