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Chris Jones

Airport Stays on Pace for Record

27 October 2004

An economic storm continues to threaten some of the aviation industry's largest players, but traffic at McCarran International soared again in September when nearly 3.4 million passengers used the busy Las Vegas airport.

Exactly how long this city can fly above the effects of its airlines' myriad financial problems remains uncertain, but Clark County Aviation Director Randall Walker said Tuesday he was pleasantly surprised by McCarran's 14.7 percent monthly gain from its 2.95 million passengers in September 2003.

"I was certain we weren't going to be in the 15 percent range, but here we are," said Walker, who credited the airport's performance to the strength of the city's hotels, casinos and trade shows.

Historically, the traditional back-to-school month has been a relatively weak period for travel following the busier summer season. However, the final four months of last year were particularly strong at McCarran, and Walker expected this year's September gain would be smaller.

McCarran remained on pace to handle 40 million arriving and departing passengers this year, well above its record of nearly 36.9 million set in 2000. Still, Walker is concerned problems facing aviation worldwide, most notably skyrocketing jet fuel prices, could affect future traffic.

"The industry is a mess," Walker said. "In its current format, this industry cannot survive when (crude oil) sells for around $50 a barrel."

Some of McCarran's largest carriers are teetering on financial disaster. United Airlines, Las Vegas' third-busiest airline with 2.4 million passengers through September, has been in bankruptcy protection for 22 months and last week sought court approval to re-evaluate its current business plan.

It could soon be joined in bankruptcy court by fourth-ranked Delta Air Lines (2.08 million local passengers this year) unless the Atlanta-based carrier receives concessions from its pilots union, as well as US Airways, which has just a dozen daily departures from McCarran.

Second-ranked America West (5.09 million), scheduled to report its third-quarter earnings today, earlier this month warned that low yields and high fuel costs would likely cause "significant losses" for the third and fourth quarters.

Even Southwest Airlines, McCarran's top carrier with 9.75 million passengers this year, said this month its fourth-quarter revenue could decline from a year ago because of pricing pressures caused by fuel costs and excess capacity.

Each of those carriers has enjoyed passenger growth at McCarran this year, ranging from 7 percent to 17 percent, but Walker said he takes nothing for granted.

McCarran has survived large-scale airline cutbacks and closures, most recently November 2002's shutdown of Las Vegas-based National Airlines, which carried about 6 percent of the city's air passengers that year.

As happened post-National, Walker is confident other carriers would fill the void should a competitor reduce or eliminate its Las Vegas schedule. But recent and likely changes within the aviation industry could lengthen future recovery periods, he added.

"Larger carriers used to step in to fill the void, but I don't see that happening again," Walker said. "Our traffic would come back, but it would take a while as smaller carriers grew their airlines, added aircraft and staff."

David Swierenga, an independent airline consultant with Vienna, Va.-based AeroEcon, said Tuesday past closures including Eastern Airlines and Pan Am demonstrated service voids to popular destinations can be quickly filled.

"When a carrier goes into liquidation, the airplanes still exist," Swierenga said. "And whoever it is that owns them will want to immediately get them back into revenue-generating service, leasing them out at rock-bottom rates to get something rather than nothing."

Despite such pressure, Swierenga said there's no guarantee a bankrupt carriers' planes would be redeployed on their previous routes. However, Las Vegas' ability to draw leisure and convention travelers would make it an attractive market, regardless of which company is operating the planes.

"For personal and pleasure travel, Las Vegas is one of the premier destinations in the country and is probably the least likely to suffer," Swierenga said.

Walker said a greater concern could arise from ticket prices. Fuel surcharges or other airline attempts to generate income could someday drive prices to a point where casual travelers may choose not to fly, though recent airline attempts pass costs on to consumers have been widely rejected due to an abundance of seats in operation.