Americans have reduced their air travel due to higher ticket prices, long lines and congestion caused by security issues. However, the biggest culprit of reduced travel is the economy. Businesses, as well, have decreased their air travel expenditures as the economy stumbles and public opinion on corporate travel remains suspicious. In fact, Las Vegas passenger counts were severely impacted by President Obama’s chiding comments about corporations taking trips to Las Vegas. Airports nationwide are grappling with the impacts of the recession; such poignant reductions in travel have led to a slashed number of daily flights, less fees collected and slackened retail sales. However, some airports, like Nevada’s largest airports, are pursuing expansion efforts despite the battered travel industry, so as to be prepared for the economic resurgence when it arrives.
In addition to preparing for the upswing in passenger volume, McCarran International Airport has long been deficient in its capacity to properly service the number of visitors it sees each year (over 44 million in 2008) and many believe the expansion efforts are long overdue. A great deal of public works projects are receiving extra scrutiny these days, but it should be noted that the majority of funds for McCarran’s and Reno-Tahoe’s expansion efforts were secured before the economic tailspin substantially reduced travel across the board.
The Challenges Keep Coming
The current recession has presented airlines and airports with a myriad of obstacles. “In the first several months of 2008, oil prices went through the roof and airlines such as ATA, Aloha and Champion went out of business as crude oil prices climbed as high as $147 a barrel in July, well above the $60 to $80 range consumers were paying in mid-2007,” said Rosemary Vassiliadis, deputy director of the Clark County Department of Aviation. The cost of oil has an enormous impact on the airline industry. Airlines are hard pressed to meet their profit margins when oil is expensive and the cost of a barrel of oil is subject to the volatility of the commodities market. Many carriers faced with declining profits reduced their overall fuel expense by eliminating service to various destinations; Las Vegas being one of those destinations in many cases. Subsequently, McCarran International Airport saw 14 percent less daily flights in January 2009 compared to the number of flights in January 2008.
The Reno-Tahoe Airport Authority foresaw the economic downtown in the spring of 2008 and planned a budget that responded to financial turbulence and prioritized line items to facilitate budget adjustments throughout the year if economic issues occurred that required reductions. “In the past year, the airport has lost 17 flights and finished the 2008 calendar year down 12 percent in passenger numbers,” said Krys T. Bart, president and CEO of Reno Tahoe Airport Authority. “Across the country, more than 97 airports have lost commercial air service.”
“Passenger traffic has decreased, particularly in the final four months of 2008 when several airlines trimmed their Las Vegas schedules,” said Vassiliadis. Since September 2008, McCarran has seen double-digit percentage decreases in passenger traffic compared to the same months in the previous year, 2007. “I expect that trend to continue in the early portion of 2009. Beyond that, the economy is too volatile to make reasonable predictions,” she said.
Airports operate in direct correlation with hotel room vacancies and occupancies. “Economic cycles go up and down, and while we’re currently in a downward period, there are still nearly 18,000 new hotel rooms set to open in Las Vegas this year or next, as well as the 8,600 new rooms that recently opened at The Palazzo, Encore, and elsewhere in town,” said Vassiliadis.
McCarran Airport’s Terminal 3
In 2007, McCarran saw its busiest year with nearly 48 million people passing through its gates. Once the Terminal 3 project is complete, the airport will be able to handle 53 million passengers each year. The project spans nearly 1.9 million square feet over three stories and will include 14 new aircraft gates, TSA security checkpoints on two levels, baggage claim, ticket counters, a multi-story parking garage, an Ascension Tracking System Station to connect the new terminal to the existing 36-gate Concourse D, and a new central plant. The project, designed by the architectural firm of PGAL, is spread across a 70-acre area and is estimated to cost $2.4 billion with an expected completion date of 2012. The project technically started back in March 2006 when work began to relocate Russell Road to make room for the project. Since construction has commenced, a considerable amount of progress has been made. Last summer it was announced that Perini Building Company had been awarded the $2.4 billion construction contract to build Terminal 3 (T3) and since that time, numerous others builders have come on board to complete various stages of the project.
Las Vegas-based G.C. Wallace Companies is currently providing design-engineering services for the T3 project. The project consists of the design and preparation of construction documents for the access and recirculation roadway system, storm drainage, water distribution and sanitary sewer systems related to the proposed Terminal 3. The development of Terminal 3 is actually several major projects within a project and, “This has created challenges related to coordination of the design and construction between the projects,” said Brian L. Schmidt, P.E., senior vice president of G.C. Wallace Companies. “It is a complex project with many facilities being constructed on a relatively compact site. Phasing of construction activities has been a critical part of the planning.”
McCarthy Building Companies, is performing $153.7 million in critical civil site improvements called the Early Site Civil Package which is expected to be complete in June 2009. “As general contractor for the first package of McCarran’s Terminal 3 expansion our top priority needed to include partnering with Bechtel and the Department of Aviation to ensure Clark County’s goals were met,” said Ray Sedey, McCarthy Building Companies’ project director. McCarthy’s ability to exceed all of the project milestones to date on the Early Site Civil Package, directly correlates with other contractor’s abilities to maintain efficient planning and construction on the later phases. The project scope includes approximately 1,300 drilled piers, an underground utility tunnel, a two-story underground automatic tram station shall, grade beams and pier caps, retaining walls, site utilities, three miles of hydronic piping, site demolition, grading, temporary and permanent dewatering.
The Penta Building Group, a statewide commercial contractor, is the general contractor of the Terminal 3 Central Utility Plant project.
One of Penta’s tasks includes the movement of water at and underneath the new terminal. “What is so unique about this project is the extensive under slab sub-base drainage system, sump pit assemblies and waterproofing details to control the earth water below,” said Jeff Mills, project manager with Penta. “Also as part of the central utility plant, we are constructing a below grade water basin that will hold approximately 250,000 gallons of water feeding six concrete cooling towers. The central utility plant is located approximately 1,000 feet away from the new Terminal 3 project, supplying chilled and heated water for the mechanical system through an underground tunnel connecting both projects.”
Six of the new terminal’s 14 gates will be designed to accommodate international air service with secured access to a U.S. Customs & Border Protection area capable of processing up to 2,000 international passengers per hour. Also, up to five wide body jets could be serviced simultaneously, allowing for greater foreign air service than is currently possible at McCarran’s smaller international facility at Terminal 2.
Currently, most of the airport’s traffic goes through one main building which has accommodated more people than originally designed to handle. With T3, congestion seen in ticketing, baggage claim, security checkpoints and parking will be split among two main terminals, resulting in a smoother operation. This will greatly ease traffic throughout McCarran, particularly in Terminal 1. Airport authorities hope the new terminal will increase international travel to Las Vegas and airport executives are already talking with airlines about expanding services to the city using Terminal 3’s international amenities.
McCarran International Airport’s massive expansion has been criticized by members of the Las Vegas community, but airport officials say they are still moving forward with the project. “We’re going forward with the majority of our capital improvement projects, which are projected to cost the Department of Aviation nearly $3.7 billion between now and 2013,” said Vassiliadis. The largest element of McCarran’s expansion, Terminal 3, is expected to open in mid-2012. Analysts have reported that even with Terminal 3, McCarran might reach its expanded capacity sometime before 2014.
The Ivanpah Airport, a 6,000-acre site and $7 billion-plus venture, is planned to be another major public air carrier airport servicing the Las Vegas Valley. The project would bring significant economic benefits to the Valley, but has currently been delayed until 2018 or 2019.
Reno-Tahoe International Airport
Reno-Tahoe International Airport is also undergoing massive expansion efforts. The $60 million expansion project (with Transportation Safety Administration contributing $12 million) will involve a bigger, reconfigured lobby area in the terminal building as well as a new baggage system, a $27 million control tower and a Hyatt hotel. The majority of the project is expected to be completed in the fall of this year.
“In the past year, during these troubled economic times, Reno-Tahoe International Airport has kept more than 1,000 construction workers employed on a variety of projects,” said Bart. “The Airport Baggage Check-in Project (ABC) is funded through a user fee that travelers pay on a ticket whenever they fly through Reno-Tahoe International.”
The reconfiguration of the lobby space was designed by the firm Gresham Smith & Partners (GS&P) who provided engineering, interior design and project management. Sparks-based Q and D Construction is the general contractor for the Airport Baggage Check-in (ABC) project.
The six-story, 127-room Hyatt Hotel broke ground in the summer of 2007 and is being built on the airport’s property west of the parking area. The hotel will not have a casino and is expected to be completed next year. Five-acres off Plumb Lane around the hotel site is planned to be available for retailers and restaurants.
In addition to expanding its capacity, Reno-Tahoe International Airport is seeing business aviation increase. “In November, we announced that Dassault Falcon, a France-based corporate jet manufacture, was locating a factory-owned service center on the airport,” said Bart. The center would be one of only five such facilities worldwide and would employ more than 40 people in its first year. The service center is expected to open this spring and would attract business jet traffic from the Pacific Rim, Canada and all across the United States.
Henderson Executive Airport
Alongside the declining air traffic at Nevada’s two largest airports, Henderson Executive Airport saw a 14 percent decline in traffic year-to-date. According to Vassiliadis, the loss in volume means less revenue is generated at the airports, whether that stems from reduced fuel sales or fewer small aircraft owners paying to park their aircraft at their facilities.
Vassiliadis also said that most of the near-term needs for Henderson Executive were already added by the Department of Aviation prior to the current economic downturn. “We opened a new terminal there in 2006. There’s also a new maintenance building, 15 acres of aircraft parking areas plus new utility infrastructure. When Clark County bought the airport in 1996, it had just one runway. We’ve since added a second runway and are now constructing an additional seven-acre itinerant aircraft parking apron. The airport is poised to serve the community’s needs essentially as it now stands. Most of the future development at Henderson Executive would be done by private companies seeking to lease the property from us, and they’ll move forward on those projects as market conditions dictate,” said Vassiliadis.
North Las Vegas Air Terminal
This airport saw the steepest decline of all Nevada’s aiports in air traffic, approximately 28 percent for year-to-date data. The loss in flights has meant that some future developments at the Air Terminal are being put on hold. For example, some private companies have leased land from the Department of Aviation (DOA) to develop new hangar space and since air traffic demand has slackened, the need for more space has dropped on the list of priorities. “Those projects being stalled will also affect our bottom line in the near term because we were slated to receive a portion of the money that comes from the lease of those hangars once they’re built,” said Vassiliadis. “The Department of Aviation has also completed some substantial upgrades over the past few years at the North Las Vegas Airport, so it’s also able to continue serving the community in its current capacity. The Las Vegas Metropolitan Police Department is constructing a 37,000-square-foot hangar as a new base for its air search and rescue activities.”
Staying the Course
There might be some who wonder if continuing with the expansion projects is the wisest course of action given the current economy, but what many do not realize is that the Department of Aviation’s budget is based upon revenue earned at its airport facilities, not local tax dollars. In fact, no public money was used in the construction at McCarran and no future taxpayer obligation will be incurred. “We’re required by the federal government to operate like a business. If people spend less money at McCarran, if people travel less frequently, then we’ll feel those effects on our bottom line,” said Vassiliadis. “The Department of Aviation, which had previously been authorized $360 million to build, recently trimmed $215 million from the current five-year capital plan by postponing a project to rehabilitate a runway.”
Despite the economy, construction continues and completion dates remain firm on both major expansion projects, which will most certainly change the face of air travel throughout the state. Although passenger counts are down across the state, when the economy regains its robustness, all of the Nevada’s airports will be in a stronger position to handle the capacity the state is used to seeing.