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Gaming Guru

Tim O'Reiley

McCarran traffic down in December, slightly up for 2012

30 January 2013

LAS VEGAS -- Continuing the trend that emerged last spring, passenger traffic at McCarran International Airport dropped slightly to finish the year.

During December, the 3.2 million passengers who passed through the two terminals marked a 0.8 percent decline from the same month in 2011. The 5.9 percent gain from international passengers only partly offset the 1.5 percent decline from the much larger domestic market.

For the year, 41.7 million people moved through McCarran, about 0.4 percent better than 2011.

The anemic results come against a backdrop of the largest carriers sticking to a strategy called capacity discipline, which involves keeping a lid on schedules in order to support higher fares through tight supply. Market leader Southwest, for example, has vowed in several conference calls with industry analysts not to add planes to its fleet until its profits meet internal targets.

In addition, Delta and United, among others, have focused increasingly on attracting business road warriors who generally pay higher prices than bargain-hunting tourists. McCarran has long ranked in federal surveys as having among the lowest average fares in the country.

Relief does not appear in sight. Preliminary schedules show that the number of seats coming into the market will continue to decline at least until June. McCarran management started the airport's fiscal year on July 1 projecting a 2 percent increase in passengers, but has since switched to a budget-trimming mode now that it has become apparent that actual results will fall short.

The Clark County Commission approved a plan this month to give airlines rebates on the fees they pay to use McCarran if they meet certain conditions for adding service. This reversed a long-standing policy of avoiding direct financial incentives in the wake of five years of weak growth or declines in passenger counts.

Among domestic airlines, the performance varied widely in December. The commonly owned and managed Southwest and AirTran carried 0.6 percent more passengers as AirTran continued to shrink while Southwest grew slightly because it flew planes with more seats on them and not more flights.

American, apparently nearing the end of its Chapter 11 bankruptcy reorganization, went up 10.4 percent after being down much of the year. Allegiant, after starting the year aggressively adding flights, went up only 1 percent.

Likewise, the international carriers also followed different flight paths. Canada's WestJet, a major driver in McCarran's expanding international service in recent years, was flat during the month. It fell just 25,000 passengers short of becoming the first foreign airline to cross the 1 million annual passenger threshold.

Only Korean Airlines, Sunwing and Mexico's Volaris showed double-digit growth. British Airways was flat despite adding service, while archrival Virgin Atlantic declined 8.3 percent.