Airlines: More problems for Las Vegas Strip
Fewer Flights to Las Vegas may mean fewer tourists and pain for resorts
The nationwide economic downturn, combined with extremely high fuel prices and declining profit margins, has caused five airlines with services to/from Las Vegas to file for bankruptcy or cease operations since December. Additionally, US Airways recently announced it would reduce flights servicing the valley by some 20% come August, while American stated it would cut some flights after the peak season is over.
All this bad news leads to less airline competition and fewer available seats, that when combined with new fuel surcharges and luggage fees will soon put an end to cheap flights to and from Las Vegas -- reducing the number of tourists visiting and cutting into the discretionary budgets of those who decide to come anyway -- compounding the situation we're already starting to see:
- Gaming revenue falling
- Casino layoffs starting
- State tax revenue down 9%
"It wouldn't surprise me to see a lot more capacity drawbacks in Vegas over the next year," said Darryl Jenkins, former director of the George Washington University Aviation Institute. "This isn't an economic cycle. This is a cost increase. It is the worst one any of us have ever seen."
Though Las Vegas was able to thrive in previous economic downturns, I believe this one is very different and our non-diversified gaming economy, which is completely reliant on the discretionary spending of vacationers, will get hammered this time around.
The Las Vegas Economic Downturn Has Started
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