In addition to overcoming their own incompetence, U.S. airlines are now battling with record setting fuel prices that are forcing them to cut flights and increase ticket prices. For a city like Las Vegas, it’s a double whammy.

Not only do fewer flights lead to fewer visitors, increased ticket prices mean those who do come have less money to spend when they arrive.

So far, US, Delta and United have announced plans to cut service to Las Vegas, leading to projections that by fall, total capacity into McCarran International Airport could be off by double-digit percentages. The first and second quarters of 2008 saw 3 percent and 6 percent decreases, respectively.

US Airways’ announcement that it was canceling its night service out of Las Vegas means a decrease in 1.9 million people annually.

But the bigger concern is an end to the cheap flights into the city. As Deutsche Bank analyst Bill Lerner noted, “The real issue could be the related inflation in airline ticket prices’ impact on spend per visit in the resort corridor.

“In our view, the real risk... appears to be a redistribution of visitors’ budgets following airline ticket price increases. As the cost of transport to Vegas increases we suspect visitors will continue to come at similar levels as 2007, as we have seen year-to-date, but simply spend less during their stay or shorten their visit.”

The impact spreads beyond the casino floor, too, with operators having to cut room rates. It’s a common practice, according to MGM Mirage’s Alan Feldman.

“Whenever capacity cuts or increased fares have occurred in the past, they have put price pressure on our hotel rooms,” Feldman said. “This current circumstance is no different.”

By Casino Connection Staff

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