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Jul. 17, 2008
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CORRECTION
A story in Thursday’s Business section incorrectly reported the date Clark County Board of Commissioners awarded a contract for a new airport terminal. The meeting was held Tuesday.

MCCARRAN INTERNATIONAL AIRPORT: County approves third terminal

Airline officials argue expansion too risky in current climate

By BENJAMIN SPILLMAN
REVIEW-JOURNAL
PERINI SELECTED DESPITE OBJECTIONS

Airlines aren't the only ones questioning Clark County commissioners about plans for the new terminal at McCarran International Airport.

On Wednesday commissioners awarded a $1.2 billion contract for the project to Perini Building Co. over the objections of a joint venture that lost out on the bid.

Officials from the firms McCarthy and Kiewit Western Co. made a lengthy presentation to urge commissioners to approve their $1.4 billion bid.

Attorney Phil Dabney outlined a long list of mistakes he said should disqualify Perini's bid even though it was lower than the McCarthy/Kiewit bid.

 "The numbers shouldn't matter. The law is what should matter," Dabney said.

Clark County Chief Deputy District Attorney Lee Thompson disagreed. He told the commissioners the Perini bid was valid.

 "It is the opinion of this office it is not a problem," Thompson said.

The majority of commissioners agreed. They voted 6-1 to award the contract to Perini with commissioner Tom Collins in dissent.

 BENJAMIN SPILLMAN / REVIEW-JOURNAL

Clark County is pushing forward with a $1.8 billion airport expansion in Las Vegas despite pleas to hold off from airlines who fear there won't be enough passengers to justify the cost.

In a letter to leaders of McCarran International Airport, airline officials say the state of their industry is so shaky that every airport upgrade that can't be justified by current need should be canceled or delayed.

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    • The letter got to the Clark County Board of Commissioners on Wednesday, moments before the board voted to award Perini Building Co. a $1.2 billion contract for the new terminal building, scheduled to open in 2012.

    "The challenge we have had at the airport is to keep up with the growth," Clark County Aviation Director Randall Walker told the commissioners. "The only way we are going to get relief from that is the Terminal Three project."

    The existing infrastructure at Terminal One is designed for about 42 million passengers annually. Last year, about 44.3 million people squeezed through the terminal, which handles most of McCarran's domestic airline arrivals and departures.

    Still, on Wednesday leaders of Southwest Airlines, the carrier with the largest presence in Las Vegas, said they think Clark County should reconsider the expansion.

    "What we want is to have the whole project assessed, and that is due to $145-per-barrel oil," said Bob Montgomery, vice president of properties for Southwest. "The economics of the business have changed significantly."

    To catch up with the cost of fuel, which has increased nearly 100 percent in the past year, airlines are raising fares and adding fees for everything from on-board sodas to checking a bag.

    Montgomery said the last thing passengers need is an increase in the amount of fees they pay to use McCarran. And new passenger fees are how Clark County plans to pay for the new terminal.

    "The thing most people are unaware of is the users of an airport pay 100 percent of the cost," he said.

    Currently, passengers pay an additional $5.50 on every airline ticket to support operations at McCarran International Airport, Montgomery said. The amount is below the median price of $5.81 among all the airports Southwest serves, he said.

    McCarran officials didn't have an estimate Thursday for how much they would raise fees to pay for the new terminal. But the increase wouldn't go into effect until the terminal opens, which gives passengers and airlines about four years to brace for the cost.

    By then there will also be about 30,000 new hotel rooms in Las Vegas, if the rooms now in development come to fruition. And more rooms traditionally mean more airline traffic.

    Folks who track trends in the Las Vegas hotel and casino industry say to maintain Las Vegas' current occupancy rates around 90 percent, each new room will require nearly 300 new visitors annually.

    With roughly half of Las Vegas visitors arriving by air, that translates to about 9 million more arrivals and departures at McCarran. That doesn't include locals using the airport.

    Jeremy Aguero of the Las Vegas research firm Applied Analysis said airlines are in dire straits, to be certain, but that it would be unwise to hold off on long-term airport projects.

    "If you are waiting until you are at capacity to construct that terminal, that is usually problematic," Aguero said.

    That's because by the time the airport can't accept new capacity, local hotels will need new customers to fill rooms.

    "That is sort of Las Vegas in a nutshell," he said. "Supply has a tendency to create its own demand."

    Clark County Commissioner Rory Reid agreed.

    "The only reason to (delay) that I can see is to serve the short-term interests of the airline industry," Reid said Wednesday. "I don't think it is in the community's interest to stop."

    Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861.



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    bob wrote on July 17, 2008 05:14 PM: why we keep wasting money here? What about Ivanhoe??

    Hello!!!!!!!!!!!!!!!!


    John Bredimus wrote on July 17, 2008 04:27 PM: I cannot locate the link which will take me to the entry for the preview screening of "X-Files remake" // can or will you assist me?

    Thank you/
    An RJ subscriber from Henderson


    George wrote on July 17, 2008 02:42 PM: Oh, and Ugly American is correct that the monorail needs to connect to T3 as it will dramatically cut down on street traffic and long taxi cab lines.

    But furthermore, hopefully the proposed maglev monorail will stop at both McCarran and the future Ivanpah airport. Imagine being able to park at McCarran and check into to an Ivanpah based flight in minutes.


    George wrote on July 17, 2008 02:38 PM: Southwest has all the gate capacity it needs at McCarran. They oppose the new terminal because they fear that adding a new terminal will bring competition (more gates for capacity constrained airlines such as JetBlue, Virgin America, etc.) SW's dominant position allows them to fly many routes with little to no competition - and high fares. Sucks for them to lose that.

    Our tourism based economy needs more airline capacity to grow. And consumers need more choices than just SW and US Airways.


    If you build it - they will come wrote on July 17, 2008 01:04 PM: Las Vegas is not afraid to take chances and the just-go-for-it mentality has worked so far . . . .Maybe by 2012 we will have hybrid airplanes to fill up the new terminal!!


    ws wrote on July 17, 2008 12:50 PM: McCarran International Airport would continue to host most commercial airline traffic to and from Las Vegas, Ivanpah would accommodate international and long-haul domestic flights.

    I bet Ivanpah gets scrapped or delayed first.


    SSS wrote on July 17, 2008 11:38 AM: They want to add another terminal? Some weeks ago I read in the LVRJ that they were proceeding with plans to construct a new airport at Ivanpah, on the NV/CA stateline! This whole thing doesn't make sense.


    Tom Best wrote on July 17, 2008 11:30 AM: Perini, from Framingham, Mass, has always been linked to the mob. It's not like building casinos is brain surgery, but they get all the action. So now they're experts at airport construction, too. Would seem like Vito and Fredo got to the Clark County Commission just in time. Ten years from now, the perp walk to Desert Springs will begin. Rory better hope he doesn't win the governorship in 2010, since it will get quite messy......


    NRB wrote on July 17, 2008 11:12 AM: Typical county move. Pay no attention to the facts. Since SW Airlines is about the only profitable airline I think they should listen to them, they know what they are doing.


    Ugly American wrote on July 17, 2008 11:04 AM: What would be cheaper & immediately useful would be to streamline the existing terminals & procedures. There's also a new generation of flight route software that reduces fuel use and helps space scheduling.

    Then run the monorail directly into the airport like they promised they would. In Germany they have combined rail & airline system where you can check in at each rail station & your luggage is RFID tagged and routed to/from the hotel directly to/from the plane. It's a huge time saver.


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