Las Vegas International Airport – no longer gambling on its future
Las Vegas is one of several US cities, those whose economy is heavily influenced by leisure activities, to have suffered badly from travel restrictions imposed during the COVID-19 pandemic.
But it quickly recovered from 2Q2021 onwards, and its main airport has experienced record passenger growth figures in the past few months.
Las Vegas' airport handled 4.9 million passengers in Jul-2022 - an increase of 17.2% year-on-year and a new monthly record for passenger traffic. It is the second consecutive month that the airport has recorded a new all-time traffic record, having handled 4.7 million passengers in Jun-2022.
The airport has recently been renamed in honour of one of its strongest proponents, and with the regional economy prospering it can look forward to resuming its place as one of the USA's major gateways.
Summary
- Las Vegas International Airport breaks passenger traffic records and capacity is above 2019 levels.
- Still domestic traffic mainly, but international is returning.
- Report suggests that the local economy will continue to improve throughout the remainder of 2022.
- Gambling activities continue to be the major influence on traffic, along with conventions and sporting events.
- The airport has been renamed after a senator who fought hard for new infrastructure.
- 'Routes World' airline and airport network planning event to be held there in Oct-2022.
One of several airports whose use is influenced by gambling activities
Perhaps it is because many folk love to gamble, even at risk of losing their shirt, that Las Vegas' Harry Reid International Airport has bounced back from the COVID-19 pandemic so strongly.
Las Vegas is one of several airports around the world where traffic figures are heavily influenced by gambling activities.
Others include the competing Nevada resort city of Reno, Atlantic City in New Jersey, Monte Carlo (Monaco) on the Mediterranean Sea, and Macau in Southeast Asia - which is regarded as the world's #1 gambling city.
Month-on-month traffic growth records broken in 2022
Las Vegas' airport handled 4.9 million passengers in Jul-2022, which was an increase of 17.2% year-on-year and a new monthly record for passenger traffic. It is the second consecutive month that the airport has recorded a new all-time traffic record, having handled 4.7 million passengers in Jun-2022.
In fact, three of the top five months for passenger volume at the airport have been in 2022, and it was an impressive +22% that was recorded in Aug-2022 as well, including 209% growth in the international segment.
That was not always the case. The airport recorded only moderate growth over the past decade or so, averaging 2.8% in the eight years 2012-2019.
Like most US airports, it rebounded strongly from the initial impact of the COVID pandemic in 2020 (which led to 57% passenger traffic losses) by growing by 79% in the following year, which was four percentage points ahead of the national average.
Overall growth in 2022 (Jan-Aug) has been 41%.
Las Vegas Harry Reid International Airport: annual traffic, passenger numbers/growth, 2012-2022 Aug YTD
Las Vegas Harry Reid International Airport (formerly known as McCarran International Airport) is the main gateway to Las Vegas and Clark County, in Nevada.
It was the ninth busiest US airport and 30th busiest airport globally in 2019.
Name change influenced by commercial, ethical and social considerations
The US FAA approved plans for the airport to be renamed as Las Vegas Harry Reid International Airport in late Jun-2021, and the airport completed its name change in Dec-2021.
In Airport names and political intrigue in the United States of America, a recent CAPA report, reasons were speculated upon for the name change, mindful of the current political climate in the US. The message is in the eponym in many cases.
US Senator Pat McCarran was a Democrat who represented Nevada from 1933 to 1954. Harry Reid, also a Democrat, was a lawyer and politician who served as a senator from 1987 to 2017 and as Majority Leader (the position held now by Nancy Pelosi) for eight years.
Media reports suggest that historians have called McCarran "a noted proponent of aviation but also an advocate of xenophobic and anti-Semitic policies during his career", leading several of Nevada's political leaders to have called for changing the name of the airport.
Putting politics aside, it is interesting how airports can grow into mirror images of the cities they represent. (A prime example is in Austin, Texas, one of the world's leading music cities where live shows within airport terminals are commonplace, and especially during the music festival periods.)
Few US airports offer on-site gambling
In Las Vegas' case, the very first CAPA Global Airport Privatisation Report (2005) noted how gambling was such an important part of the non-aeronautical revenue mix at the airport, earning it then an estimated USD25 million each year.
The airport was one of only two US airports that permitted on-site gambling - the other being Reno-Tahoe, but latterly they have been joined by Chicago O'Hare, where there was considerable local opposition.
A different kind of 'airport slots' conundrum, perhaps.
Las Vegas airport: on-airport gambling
Las Vegas fast and early to recover from pandemic restrictions
Las Vegas, just like other US cities that are built around leisure activities, such as Orlando and Los Angeles/Orange County, took a hit from the early ravages of the pandemic.
But the recovery in most cases started early, and especially so in Las Vegas as Airlines and gamblers return to Las Vegas; others struggle: a Jul-2020 CAPA report, highlighted with 230 hotels reopening there in Jun-2020 alone.
In World's Top 10 airports 2021 - many of the previous 'busiest airports' are back on the list, a further CAPA report published in Apr-2022, it was observed: "It is interesting to note that two airports at the centre of the world's tourism industries also performed well in 2021, namely Orlando and Las Vegas, as vacationers and gamblers confronted the coronavirus head-on by way of theme park rides and Mickey Mouse, or one-armed bandits and roulette tables".
It concluded, "Orlando, Las Vegas, Antalya and Cancún between them represent what has become the only new business opportunity during the COVID-19 pandemic, a fact that presumably won't go unnoticed in airline boardrooms".
And the subsequent traffic growth reported above adds weight to that theory.
A year on from that last report, how is the airport shaping up?
Capacity above 2019 levels since Mar-2022
Firstly, looking beyond the impressive traffic figures mentioned earlier, current and future seat capacity levels are now ahead of where they were in 2019 and have consistently been so since mid-Mar-2022.
In the week commencing 03-Oct-2022 the difference is +13.5%, and there is no suggestion that it won't stay that way.
Las Vegas Harry Reid International Airport: weekly total system seats capacity, 2019-2022
When the same chart was published in the Jul-2020 report, the green line for the current year 2022 had a U-shape that was as deep as the nearby Hoover Dam.
Still mainly domestic traffic but international will return and Europe will figure
Las Vegas Airport remains mainly a domestic airport for now, with only 5.7% of seat capacity on international services.
The average flight length, as measured by seats, is less than three hours, and as measured by ASKs/ASMs it is just over four hours.
The large increase in international passenger numbers for Aug-2022 suggests that that may be about to change. British Airways, for example, will return in Mar-2023.
For now, the relative paucity of international services can be seen in this map.
Las Vegas Harry Reid International Airport: network map for the week commencing 03-Oct-2022
Target markets for the future will probably be where there is some capacity already.
Canada and Mexico are the two main countries, but three of the top seven are in Europe (UK, Germany and the Netherlands), together with South Korea and the Central American playground of Panama.
Domestic routes are mainly low cost
The airport is also fundamentally a low cost airport as well, with 71.5% of capacity on budget airlines, led by Southwest Airlines (34.5%) and the ULCC Spirit Airlines (15.5%).
That is no great change from 2020, and the three leading airlines are all LCCs - the difference being that in 2020 it was four, but the ULCC Allegiant Air no longer has the same presence there.
Las Vegas Harry Reid International Airport: system seats by business model, week commencing 03-Oct-2022
Few alliance airline seats, but no indication that that matters unduly
Las Vegas International Airport is not particularly well served by alliance airlines either, with 73.5% of its capacity on unaligned carriers in the week commencing 03-Oct-2022.
That, in theory, puts it at a disadvantage again in the international marketplace, especially as Virgin Atlantic, which serves it from the UK (London only presently) has just announced that it's joining SkyTeam.
It is perhaps a useful exercise to contrast these low cost and alliance capacity statistics with the other airports mentioned earlier that are heavily influences by 'gambling traffic', i.e. Reno-Tahoe and Atlantic City in the US, Nice (the closest international airport to Monte Carlo, and France's third busiest), and Macau in Southeast Asia.
Las Vegas Harry Reid International Airport: LCC and 'unaligned' capacity contrasted with airports having a similar (gambling) clientele
|
Airport |
Percentage of seats that are 'low cost' |
Percentage of seats that are 'unaligned' |
|
71.5 |
73.5 |
|
|
54.5 |
55.4 |
|
|
100 |
100 |
|
|
51.1 |
59.5 |
|
|
7.1 |
80.2 |
The only conclusion that can be drawn is that there is no conclusion.
There is no correlation to be made between these highly variable statistics and the success of the relevant cities as gambling centres.
High utilisation, with 18 hours of concentrated activity
Utilisation at Las Vegas across 24 hours is typically high, with 18 hours of concentrated activity relieved only from midnight to 0600, and sometimes by less than that.
There is a notable equilibrium between departing and arriving capacity as well, which encourages hubbing activities, although the airport is not set up specifically as a hub airport.
Las Vegas Harry Reid International Airport: system seats per hour for 05-Oct-2022
Modern infrastructure secured through Harry Reid's efforts
According to the CAPA Airport Construction Database, there is no infrastructure work of note at Las Vegas International presently.
However, the most recent projects include the international Terminal 3, which was completed in 2012, thereby opening up new markets, and that is largely accredited to Harry Reid's efforts in Congress, having been planned during the financial crisis in 2008/9.
Terminal 3 cost USD2.4 billion to build and is one of the largest public works projects in Nevada, replacing Terminal 2 and providing more international gates, as well as a larger US Customs and Border Protection facility.
Harry Reid is also credited with helping secure the USD111 million in funding needed for the airport's air traffic control tower, which is the second tallest in the US.
The airport is owned by Clark County and operated under the policy direction of the Board of County Commissioners, the authority of the County Manager and the management of the Director of Aviation.
As far as is known, there has never been any serious consideration of privatising the airport by way of lease, and there are no known current or historic public-private infrastructure projects.
In a city of conspicuous private sector consumption it remains a public model.
Local economy expected to improve
According to the 2022-23 Economic Outlook Report published by the University of Las Vegas' Centre for Business and Economic Research (CBER), Nevada's economy will continue its recovery and expand throughout 2022, but the picture is less clear for 2023.
That is in contrast to the national economy, which currently is experiencing a significant structural adjustment toward a 'new normal' in the midst of COVID-era impacts, the war in Ukraine, disruptions to the supply chain and trade.
Additionally, CBER's Clark County Tourism Index - which combines gross gaming revenue, room occupancy rates, and airport passengers - had recovered to more than 114% of its COVID-era decline by Apr-2022.
But CBER forecasts total visitor numbers for Las Vegas not returning to pre-pandemic levels until after 2023.
Because the Southern Nevada economy heavily depends on tourism, its outlook ties to the future path of all these factors.
The report concluded that "continued progress on vaccinating a higher percentage of the population, the absence of a new variant that can avoid the protection of vaccines, a reasonable resolution of the war in Ukraine, and how the economy reacts to higher interest rates will make economic recovery more likely".
All that sounds like a Utopian wish list, but it is reasonable to conclude that the airport is pulling its weight in the effort to restore the economic fortunes of its city-region.
'Routes World' event to take place in Las Vegas
Las Vegas is not known only for gambling and the associated entertainment that goes with it, and sporting events such as boxing.
The city is the biggest convention centre by far in the US, with many millions of square feet of space and hundreds of thousands of guest rooms.
The Routes World 2022 event, organised by a sister company to CAPA, will take place there from 16-Oct-2022 to 18-Oct-2022.