restricted access 5. Still Growing During Tough Times
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101 Despite 171,960 fewer air travelers in 2002 as a result of the 9/11 terrorist attacks, within one year the numbers of air travelers and visitors coming to Las Vegas rose higher than ever. In 2003, 36,265,932 passengers arrived by air, and in 2004, that number increased to 41,441,531. By 2007, 47,729,527 people arrived by plane.1 From 1998 to 2007, the amount of money generated by visitors rose from $24,577,499,000 to $41,578,079,000, an increase of more than 40 percent.2 Historians Eugene Moehring and Michael Green attribute the continued growth of Las Vegas to tourism, urban sprawl, and gambling, but missing from this explanation is the fact that the airlines were a powerful catalyst in driving the growth as they continued to bring ever larger numbers of tourists and gamblers to the desert resort city. Though the Las Vegas market remained lucrative for the airlines, nationally and internationally the industry still experienced significant problems. Since the 1978 Airline Deregulation Act, the economic state of the U.S. airline industry had progressively declined, approaching near collapse and becoming a serious threat to the nation’s economy and certainly to cities, such as Las Vegas, that depended on tourist-based economies. High fuel prices, deep debt, increased competition, and poor management increased the airline industry’s volatility. With such a heavy dependence on the airlines for business, and given that Las Vegas was a low-yield leisure travel market (meaning that airlines made less profit because of low fares resulting from high competition), there was always the possibility that Las Vegas might lose air carrier service, especially after the 9/11 attacks. In 2002 America West, Las Vegas’s second-biggest airline, reported a loss of $347 million in the first quarter. The airline had to cut ten of its daily flights serving Las Vegas from New York, Phoenix, and Washington, D.C.3 Southwest Airlines, the largest carrier serving Las Vegas, saw a passenger decrease of 4.8 percent and reduced its daily flights at McCarran from 169 to Still Growing During Tough Times c h a p t e r f i v e ▶  102 ◀ l a n d i n g i n l a s v e g a s 125.4 That same year, United Airlines lost $2.97 billion, the largest annual loss in airline industry history, and had to declare bankruptcy for the first time in its own history. United’s restructuring plan of frugality pressured all union staff—pilots, flight attendants, mechanics, and customer service agents—to agree to a 30 percent pay cut. Further, the airline retired one hundred of its aged jets—Boeing 727s, 737s, and DC-10s—and replaced them with moreefficient jets such as the Airbus A319 and A320 and the Boeing 757 and 767 to save money on fuel and other costs. The company also cut 10 percent of its domestic flights. The fifth-largest airline nationwide watched its passenger volume in Las Vegas drop by 21.2 percent. Even with the restructuring, which included the need to reduce wages by $2.4 billion per year through 2008, the airline still lost $3.2 billion in 2002. United left bankruptcy with $17 billion in debt and received $3 billion in exit financing secured with weak mortgages on all of the airline’s assets.5 Delta and American did not fare any better. Facing massive debt and bankruptcy , Delta had to ground forty planes and cut domestic capacity by 10 percent .6 American followed suit, having lost a total of $5.2 billion from 2001 to 2002, forcing CEO Don Carty to resign, and the airline had to cut 189 daily flights and 12 percent of its domestic capacity nationwide.7 In the first three months of 2002, all of the U.S. airlines lost a combined $2.4 billion and were on course to lose another $6.4 billion. By the end of that year, long-term debt for the airlines increased from $15 billion to $43.2 billion, the highest ever.8 Recognizing that the airlines were drowning in debt and facing economic collapse, in 2001 Congress already had passed the Air Transportation Safety and System Stabilization Act, an emergency $5 billion loan to keep troubled airlines afloat. But the airlines needed more money. Knowing how vital air travel was to the country and its economy, Congress was not going to let them...


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Subject Headings

  • Las Vegas (Nev.) -- History.
  • Las Vegas (Nev.) -- Economic conditions.
  • Tourism -- Nevada -- Las Vegas -- History.
  • Airlines -- Nevada -- Las Vegas -- History.
  • Aeronautics, Commercial -- Nevada -- Las Vegas -- History.
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