Cargo center could boost profitability for McCarran carriers

David Strow

Tuesday, June 20, 2000 | 10:58 a.m.

Airport growth

McCarran International Airport today said it served 3.089 million passengers in May, up 7.6 percent from May 1999's 2.87 million. Year-to-date traffic is up 9.5 percent.

Southwest Airlines, the busiest carrier at McCarran, led the increase in May with an increase of 11 percent in its Las Vegas passenger count. Southwest had 867,000 arriving and departing passengers in May.

America West, the No. 2 carrier in Las Vegas, posted a decrease of 6.4 percent. Also declining were No. 3 United (-6.3 percent) and No. 5 American (8.7 percent). No. 4 Delta was up 1.7 percent.

A consortium of European investors wants to build a $400 million international cargo center and airplane maintenance center on 150 acres of land at McCarran International Airport.

The development group, MSA NV LLC, has leased the land parcel from the airport, and hopes to begin development next year. If all goes according to plan, the center could open as early as 2002. The center would be on airport land about 300 feet south of Russell Road, between Spencer Street and Eastern Avenue.

Lawrence Semenza, a local attorney and principal in MSA, said a key marketing point of the center will be helping airlines make their Las Vegas trips more profitable by allowing them to process more "belly cargo" -- cargo carried in airliner space unused by passengers -- through McCarran. More profitable airline routes, Semenza said, could mean more flights for Las Vegas.

"Air cargo is really a profitable business," Semenza said. "(Passenger traffic into Las Vegas) has a low-yield return for airlines. This is an attempt to raise the yields of these aircraft by giving them the ability to process air cargo efficiently."

Comparable centers currently operate in Los Angeles, San Francisco and Seattle -- but each center must contend with air and traffic congestion.

"This obviously lends an alternative to (those cities) if we can continue to build up the routes," Semenza said.

Another reason a Las Vegas cargo center makes sense, he said, is the high demand for fresh products from the city's hotel-casinos.

"In Las Vegas right now, just in the new restaurants, the demand for fresh products is just overwhelming," Semenza said.

The developers plan to lease out both the cargo center and maintenance center to outside companies for operation. The maintenance center would comprise two aircraft hangars, each capable of holding a Boeing 747.

"One company (we're in discussions with) has two main facilities in the U.S., and wants to establish three additional facilities," Semenza said. "There's a tremendous demand for (outsourced) maintenance. The company we're looking at can do a superb job, quicker than most other air maintenance facilities in the United States."

The group is working through Wall Street securities firm Goldman Sachs to secure financing for the project, and is examining a variety of financing options. Other principals in the project include Reinhold Meyer, a German engineer, and agiplan, a German logistics company.