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Matthew Crowley

Vegas air traffic finally up

28 December 2009

LAS VEGAS, Nevada -- Well, hooray.

In November, for the first time in 21 months, Las Vegas counted a month of increased year-to-year air passenger counts. The month's 0.1 percent uptick in fliers at McCarran International Airport is small, yes. But slightly up is better than down, right?

In November 3,234,705 passengers arrived in Las Vegas, up from 3,232,985 a year earlier. November's rise was the first year-over-year monthly rise since February 2008, which had an extra day as a leap year, and only the second since October 2007.

Also on the upside, two of McCarran's top five carriers increased their flier counts in November. Southwest, the biggest carrier, ferried 1,232,772 passengers, 9.3 percent more than 1,127,564 a year earlier. American Airlines carried 179,765 passengers, up 5.4 percent from 170,610 a year earlier.

But maybe we shouldn't cue the confetti. McCarran's year-to-date flier count, 37.3 million, is down 8.7 percent from 40.9 million a year ago.

"A slight gain is better than no gain and it's certainly better than a loss," McCarran spokesman Chris Jones said, noting that November was the first full month of daily flights from British Airways.

"However," he added, "it's one month's data. And one month of flat figures should not be misconstrued as a trend."

Analysts see two trends behind Southwest's local surge. Bijan Vasigh, managing director at Ormond Beach, Fla.-based Aviation Consulting Group, said by diversifying its customer base to serve both leisure and business travelers, Southwest has outperformed its rivals even during the downturn.

And, suggested Bob Mann, an airline analyst for Port Washington, N.Y.-based R.W. Mann & Co., Southwest may be collecting passengers that might have flown US Airways.

Many carriers began cutting service to Las Vegas in September 2008 as the economy flagged and fuel costs rose, but US Airways has cut the most. The Tempe, Ariz., carrier, which averaged 140 flights to Las Vegas a day in 2005, in November said it would cut its schedule of 64 daily departures to 36 by February.

Nevertheless, Mann said, demand remains strong for Las Vegas.

"Las Vegas has done a fabulous job of marketing itself, not just as a place for gaming, but as a place for meetings and business," he said. "I'd expect the domestic mix for traffic to change over time, with conventions and meetings probably becoming a bigger factor. But even if a meeting is the purpose of a trip, that doesn't mean people won't find their way into gaming side of the house."

Mann said airline rates may be at the cusp, or slightly past the cusp, of recovery. Vasigh said he was encouraged by signs of economic stabilization and expects airline capacity to return to prerecession levels late in 2010.

But Mann said there's a huge disparity between what happens in the mainstream marketplace and what happens on Wall Street. For airlines to fully recover and thrive again, he said, unemployment, which was 12.3 percent statewide in November, must decrease and job creation must increase.

"What the airlines need to feel good about the market and put more capacity into the market is employed people who have discretionary income to spend on airfares, specifically for vacation travel," he said. "And they need businesses to earn good profits and send people on business trips, because that's where network carriers tend to focus.

"Given what we're seeing with employment, recovery for American business may be a long way off," he added. "We're not seeing job creation week to week or month to month, we're seeing job losses. And that, unfortunately, is not a good sign."