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Gaming Guru

Tim O'Reiley

McCarran traffic drops 3 percent in September

30 October 2012

LAS VEGAS -- The slide in passenger traffic at McCarran International Airport intensified in September with the weakest performance in more than two years.

The 3.4 million people passing in and out of its terminals marked a 3 percent decline compared with the same month last year, as four of the five top airlines shrank. Only discounter Spirit, which aggressively boosted its local schedule last year and added a crew base, showed a gain among that group.

As a result, the rate of decline was the steepest since the 5 percent dip in April 2010. A modest recovery had begun toward the end of 2010 after a sharp fall during the recession, as passenger totals rose 4.3 percent in 2011 and 3 percent during the four months through April 2012. The results started to tail off.

The 31.5 million passenger figure for the nine months through September is now only 0.9 percent better than last year.

Las Vegas-based Allegiant Air, which had been growing rapidly earlier in the year, saw its passenger total fall 1.5 percent, and it fell from the ranks of the five largest. At a conference of Wall Street analysts in September, airline executives pointed to the sharply higher fees and rents McCarran is charging the airlines to pay for the new $2.4 billion Terminal 3.

But two other larger factors are at work. Many of the large carriers, including Delta Air Lines, United Airlines and US Airways, have reined in their schedules. What they call capacity discipline is designed to allow them to raise fares because of reduced supply, helping them to offset higher fuel costs. For the industry, fuel has grown into the largest expense item.

In addition, government surveys have consistently shown Las Vegas as one of the cheapest destinations in the country because it is so heavily skewed toward leisure travelers. Business fliers often pay much higher ticket prices to get flexible conditions or because they buy on short notice.

The McCarran flight numbers cast a large influence over the entire visitor industry, not only because more than 40 percent of people fly here but surveys have shown these people often stay longer and spend more.

Although some domestic carriers, such as Spirit, Hawaiian and Virgin America, have continued to grow, they have not offset the cutbacks by their rivals.

International traffic continues as a bright spot with a 9.7 gain for the month, but this was a slowdown from the 11.2 percent for the year to date. Almost all of the airlines in this sector posted gains.