Vegas tourism drop dims need for airport expansion, airlines say

LAS VEGAS -- Airlines serving McCarran International Airport have issued the bleakest economic forecast yet for Las Vegas, recommending that officials reconsider the need for a terminal that is under construction because there may not be sufficient tourism traffic to justify it.

The airlines also have asked the airport to cancel its $114 million Heliport project and to reevaluate all other capital projects in McCarran's five-year plan.

The airlines' message to Las Vegas: The industry will not quickly recover from the tourism decline wrought by a combination of higher fuel prices and a sputtering economy.

County officials scoffed at the airlines' pessimism, saying the region's economy depends on an airport built to support more tourism traffic. The Clark County Commission on Wednesday voted to stay the course with construction of the terminal.

Airport projects such as McCarran's $1.8 billion Terminal 3 are financed with fees paid by airlines, which pass those costs on to customers through fare increases and various charges. The airlines serving Las Vegas would begin paying for the cost of Terminal 3 after its opening, scheduled for 2012.

In Las Vegas, an advisory committee for airlines serving McCarran asked the airport last week to take a second look at the projects in its $3.5 billion capital improvement plan.

"The current state of the industry is at an all-time low and there is much uncertainty as to what the future holds," wrote Linda Macey, Southwest Airlines' manager of properties and chairwoman of the McCarran committee, in a letter to Aviation Director Randall Walker. "Specifically, we request that any nonessential expenditures be deferred and that all remaining projects be reevaluated for any and all cost savings potentials."

She added: "Only those projects with a current, justifiable need should be funded at this time."

In particular, the committee asked the airport to delay awarding a contract for further construction of Terminal 3 so it can "further discuss and evaluate the risks and benefits associated with proceeding ... at this time."

The letter carried little weight with the Clark County Commission, which, at Walker's behest, voted Wednesday to approve a $1.2 billion contract for Perini Building Co. for construction of Terminal 3.

County officials were adamant that nothing be done to jeopardize Las Vegas' ability to fill 30,000 more hotel rooms scheduled to open in the next three years.

"For the last number of decades the challenge we've had is to keep up with the growth," Walker told commissioners. "If we do not build Terminal 3, it will be a self-fulfilling prophecy that those hotels cannot get filled."

Commissioners agreed, voting 6-1 to approve the construction contract.

"Our choice is to decide to step back and ensure we don't have the capacity to make our tourist-driven economy successful," Chairman Rory Reid said. "The only reason to do that is to serve the short-term interest of the airline industry . . . It's not in the community's interest."

Las Vegas has been a reliable bet for the airlines for the past 25 years, but the industry now seeks "to make sure the capital plans are rational and that they will work in this new economy," said Bob Montgomery, Southwest Airlines' vice president of properties and a spokesman for the McCarran airline committee.

In Las Vegas, the largest capacity cuts are expected to come from Phoenix-based US Airways, the second-busiest carrier at McCarran.

Effective Sept. 3, the number of daily US Airways departures to and from McCarran -- as high as 141 less than a year ago -- will drop to 81. By the end of the year, the airline will cut another seven flights.

According to the latest figures, from May, McCarran saw a 5 percent drop in passengers compared with the previous May. Overall, passenger numbers are down 2 percent for the year.

"We just don't know the impact to business or how long it will take to recover," Montgomery said. "Right now we have lots of questions and very few answers."

In the end, the city will need the new terminal, UNLV economist Keith Schwer said. Casinos "are going to try and put heads in the beds and that will take more flights coming in."

And although he noted that some carriers would likely not live to see new Strip construction, others will take their place.

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)