McCarran growth off in December

David Strow

Friday, Jan. 21, 2000 | 10:58 a.m.

Passenger-count growth at McCarran International Airport was a routine 5.8 percent in December -- though the airport finished the year up 11.4 percent, the largest increase in five years.

McCarran counted 2.43 million arriving and departing passengers in December. The 5.8 percent increase marked the first time the monthly growth percentage slipped into single digits since June, and the slowest growth rate since December 1998.

"Last year, we had such phenomenal growth that we're leveling off to a more normal growth pattern," said Hilarie Grey, spokeswoman for the airport. "This would be more of a normal growth rate for us. We're just kind of catching up."

Rob Powers, spokesman for the Las Vegas Convention and Visitors Authority, also noted that December and June are typically the slow months for the Las Vegas tourist economy.

In 1999, McCarran passenger traffic hit an all-time high of 33.7 million, up 11.4 percent from 1998.

The largest increase was posted by Southwest Airlines, which saw an 11.6 percent jump in 1999, to 9.39 million. That gives the airline a 28 percent share at McCarran.

The second-fastest grower was United Airlines, with a 7.1 percent increase, followed by Delta with a 6.6 percent increase.

The only top five airline in Las Vegas to lose market share in 1999 was American, which saw its traffic decline 7.1 percent, to 2.6 million, as it cut some Reno Air flights from its schedule.

Southwest was the least affected by the December growth slowdown -- the Dallas-based airline posted a 8.6 percent gain year-over-year in December. America West, United and Delta's growth rates were flat last month, and American's plunged 21.8 percent.

One analyst thinks more was at work in December than a case of the airport simply catching its breath.

"The growth slowed because the Grinches cancelled Christmas and New Year's," said Dave Ehlers, chairman of Las Vegas Investment Advisors.

Ehlers said three factors were at work: the extremely high room rates initially advertised by Strip hotels for the New Year's weekend, concerns over terrorism and fears over Y2K glitches. But he called the month an aberration, saying he expects passenger growth to range between 8 percent and 9.5 percent over the next six months.

"January and February room prices are running 20 percent above a year ago," Ehlers said. "There's no question there's a lot of demand."

While many flights were cancelled New Year's Eve for lack of demand, the air terminal servicing private jets saw traffic rise 80 percent in December, Ehlers said, suggesting strong high-end play.

"Baccarat in December will show a very substantial increase, undoubtedly," Ehlers said.

A longer-term concern, however, is the exploding cost of crude oil, and its impact on both gasoline and jet fuel prices.

Jet fuel prices have more than tripled since last year, causing five major carriers to announce this week that they would add a $20 fuel "surcharge" to their round-trip tickets, starting February. So far, Delta, Northwest, United, Continental and American have all announced they'll hike fares.

McCarran's No. 2 carrier, America West, is still undecided whether it will follow. "We are still studying and evaluating that issue," said Patty Nowack, spokeswoman for America West.

But Southwest, the No. 1 McCarran carrier, is saying no to the surcharges for now.

"We haven't taken any action," said Southwest spokeswoman Kristin Nelson. "Currently, we are not considering it as an option."

Gasoline prices continue to be high as well. The average gas price in Las Vegas is now $1.45 per gallon, AAA Nevada reported. That's down 2 cents a gallon from December, but is up 30 percent from a year ago.

California is seeing similar increases. Gas now averages $1.39 a gallon in Southern California, AAA reports, a 17 percent increase from January 1999.

That has Las Vegas Convention and Visitors Authority officials watching, but not overly concerned -- particularly because gas prices have been high for nearly a year, yet Las Vegas set new visitor and win numbers for much of 1999.

"It is always a concern when we have rising transportation costs," said Bill Mahaffery, manager of transportation for the LVCVA. "While we are concerned, I do not see that it will have a major impact on the flow of tourists into our valley."

Ehlers believes there could be some impact, but thinks it will be minimal.

"It could conceivably have some impact," Ehlers said. "For Mr. and Mrs. Joe America, the two biggest items in their Las Vegas budget are hotel lodging and transportation. To the extent commercial air travel prices get out of hand, it's going to effect demand.

"I'm skeptical a $20 surcharge would impair demand to any great extent."

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