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Chris Jones

Las Vegas Visitation: McCarran Soars at Record Pace

30 November 2005

LAS VEGAS, Nevada -- Las Vegas air traffic again soared in October on the strength of low-fare carriers large and small.

Despite poor performances by some of the nation's largest airlines including American and Delta, passenger traffic at McCarran International Airport rose by 5.3 percent last month.

Nearly 3.84 million people arrived or departed through McCarran in the month, the Clark County Aviation Department said Tuesday.

Through October, McCarran hosted more than 37.1 million passengers -- a total that exceeds its annual passenger counts for each year but 2004.

Last year's record of nearly 41.5 million should also be shattered by year's end. With two full months yet to be reported, McCarran is on pace to handle more than 44.5 million passengers this year.

As has been the case for several years, low-fare carriers continued to dominate at McCarran thanks largely to an abundance of leisure travelers seeking cheap passage to the city's hotels, stores and casinos.

McCarran's regular market leader, Dallas-based Southwest Airlines, held its perch last month with nearly 1.2 million passengers, up 5.9 percent. Year-to-date, its 11.56 million count was up 6.3 percent.

Tempe, Ariz.-based low-fare giant America West remained at No. 2 with 627,754 October passengers, a 7.5 percent increase. Its annual count was up 12.8 percent to 6.4 million.

America West merged with US Airways earlier this year, though McCarran continues to track their airlines separately until they've fully merged their reservations systems.

Several smaller low-fare carriers also powered McCarran last month and throughout the year. They include AirTran Airways (up 45.1 percent year-to-date vs. 2004); Allegiant Air (up 61.7 percent); JetBlue Airways (up 18.4 percent) and Midwest Airlines (up 16.4 percent).

Conversely, Delta's business was down 15.1 percent in October, while American reported a 5.5 percent drop.

Northwest was down less than 1 percent, while United and Continental enjoyed mild growth at 6.8 percent and 2.2 percent, respectively.

Goldman Sachs analyst Glenn Engel said the financial problems of so-called "legacy carriers" such as Delta, Northwest and United have driven capacity shifts toward international routes with little to no low-fare competition.

Such changes often affect U.S. routes, particularly leisure destinations, he added.

"They're exiting markets where their yields are the lowest, and Las Vegas is among the lowest," Engel said.

Busy destinations can also better support point-to-point service, which most low-fare carriers favor instead of the "hub and spoke" model used by many legacy airlines. With traveler interest in Las Vegas at an all-time high, low-fare operators see this as a market where point-to-point service can thrive.

Steve Danishek, an independent travel analyst based in Seattle, agreed.

"A lot of the legacy carriers with hub and spokes rely on cities to feed" their hubs, Danishek said. "But Vegas doesn't feed anything. It sucks it in ... so it doesn't have the appeal to a hub-and-spoke carrier."

While those cutbacks will continue to trim the number of inbound seats on airlines such as Delta and United, Danishek said the strategy will benefit those companies without harming travel to and from Las Vegas. But fares on some carriers could go up, he cautioned.

"If they're flying fewer seats, that means the seats they do fly, they can get more money for," Danishek said. "But I still think the number of (total) passengers in Las Vegas will continue to go up" as more low-fare carriers enter the market.

Engel believes routing changes will level off in the months to come now that Delta and Northwest have had time to adjust to their separate Chapter 11 filings on Sept. 14.

Las Vegas continues to exceed national travel trends. Though its measuring criteria differs from McCarran's, the Air Transport Association of America last week reported domestic air traffic was flat in October, dipping just 0.2 percent from the same month a year ago.

Year-to-date, the Washington-based trade group said domestic air traffic was up 4.9 percent from 2004 when measured in miles flown by customers who purchased tickets on 13 major carriers, including a combined US Airways/America West.

October was the only month of 2005 to show a year-over-year decrease in U.S. air traffic. Association spokeswoman Victoria Day attributed the decline to domestic capacity cutbacks "where airlines restructured their routes a bit."