Las Vegas’ largest operator, Southwest Airlines, remains bullish about the region’s recovery after a massive shooting in Oct-2017 sent demand skyrocketing in the immediate aftermath of the tragic event.
- Southwest Airlines accounts for more than 40% of the weekly departure seat capacity from Las Vegas McCarran Airport.
- Southwest Airlines estimates Las Vegas shooting and wildfires will hit revenues by USD10-15 million.
- ForwardKeys analysis shows negative swings in bookings between 13% and 27% across the board.
Southwest Airlines estimates fallout from the Las Vegas tragedy and wildfires that struck the US state of California in the third quarter will crimp revenue by USD10 million to 15 million in the last quarter of 2017. Prior to the shooting, Las Vegas’ passenger numbers were increasing at a solid clip, growing 2.4% for the 9M ending Sep-2017.
The airline’s chief executive Gary Kelly recently stated the airline has not made major adjustments to fares for flight scheduled in Las Vegas and declared: “I’d be surprised if we weren’t back to 100% by the end of this quarter.”
CHART – Southwest Airlines represents approximately 26% of Las Vegas’ system ASKs, and the airport is the airline’s fourth largest measured by ASK deploymentSource: CAPA – Centre for Aviation and OAG (data: w/c 20-Nov-2017)
However, Mr Kelly admitted Southwest was continuing to “watch carefully” Houston, Florida, Las Vegas and Puerto Rico. Houston, Florida and Puerto Rico were struck by Hurricanes and the shooting during the third quarter. Houston Hobby and Orlando International are Southwest’s sixth and eighth largest bases measured by ASKs. The airline recorded a USD100 million revenue hit from the storms during the third quarter.
Although Southwest remains bullish about the ultimate recovery in Las Vegas, an analysis of booking transactions from ForwardKeys shows international bookings to the airport fell 16% and domestic reservations dropped 21% in the three weeks following the shooting.
The ForwardKeys analysis shows negative swings in bookings between 13% and 27% across the board. The largest decreases in the US domestic markets were San Francisco and New York. In the eight weeks prior to the shooting bookings were down 6% and 3%, respectively, from those destinations. During the three weeks following the tragedy, bookings had plummeted 33% and 29%. New York JFK is Las Vegas’ second largest domestic destination measured by departing ASKs.
Internationally, the most dramatic drop in bookings to Las Vegas was in the Middle East, according to ForwardKeys. Bookings from that region were already down 26% before the shooting and fell 41% benchmarked to same period the year-prior, said ForwardKeys. Asia Pacific bookings for Las Vegas were up 10% before the shooting, and fell 10% after.
Bookings from Europe were up 2% prior to the shooting, and dropped 19% after the event. The UK, which represents Las Vegas’ largest international destination measured by ASKs, was trending down 11%, and bookings fell to 14% post shooting.
While reservations for the coming six months have fallen back, “it is not a certainty that the market will stay down,” ForwardKeys concluded. “If the US economy picks up; if there are no more similar incidents and if there is a brilliant promotional campaign by Las Vegas, it is possible that the situation can be turned around.”
Mr Kelly explained Southwest was “very close with the Las Vegas Convention and Visitors Bureau…We’re mainly, just making sure that everybody knows, again…that we’re open for business. And I’m confident that the traffic will come back and grow”.