Leaving Las Vegas: Fuel Costs Affect Travelers' Options
US Airways Cuts Flights From Popular Midnight Hub; Stopover Gamblers Miss Out
Wall Street Journal
THE MIDDLE SEAT
By SCOTT MCCARTNEY
March 25, 2008
Skycaps were doing a brisk business and a line of travelers waited to check in at a busy
Las Vegas airport terminal on a recent Monday. A monitor showed US Airways flights
soon to depart to 29 different cities.
And yet, it was 11 p.m. Even though most all other airlines have shut down their
operations for the night, save a few redeye flights, US Airways Group Inc. was operating
a major hub operation in the middle of the night.
The full-scale "midnight hub" is unique in U.S. aviation, and for many fliers, including
business travelers, this quirk of U.S. aviation is the only way to get from one coast to the
other overnight. But now, the midnight hub at McCarran International Airport in Las
Vegas is threatened because of high fuel prices -- a tangible sign of how airlines cut
domestic service when finances turn sour, leaving travelers with fewer flight choices.
High oil prices have prompted US Airways to cut about 30% of its overnight flights in
Las Vegas, trimming the schedule primarily on off-peak days (Monday, Tuesday,
Wednesday and Saturday). Flights to nine cities have being suspended, including
Cleveland, Raleigh and Denver. Miami ends April 5; the El Paso, Texas, late-night flight
will be suspended May 3, US Airways says.
"The Las Vegas night system is vulnerable," said US Airways President Scott Kirby.
"Flights that made sense at even $85 for oil are not making sense today."
The Las Vegas midnight operation is a microcosm of how high oil prices are affecting
airline service. As oil prices rise, less-profitable flights become money-losers, and
airlines eliminate them from schedules. Domestic flights are the first to go. That leaves
smaller towns with fewer flights, and shaves late-night and early-morning trips from
flight schedules because they are less popular with passengers. Travelers lose options and
have to crowd onto fewer flights at higher prices, though an economic slowdown may
curb demand for seats.
For airlines, the combination of high oil prices and recession can be devastating. Small
carriers get pinched quickly -- Aloha Airgroup Inc., parent of Aloha Airlines, filed for
bankruptcy protection last week, and Frontier Airlines Holdings Inc. struck a deal to sell
four of its jets. Discounters Southwest Airlines Co., AirTran Airways Inc. and Skybus
Inc. said they will slow their growth. Big carriers are moving rapidly to shrink. Delta Air
Lines Inc. said it plans to shed 2,000 jobs and take 20 mainline jets out of service and
ground another 20-25 smaller regional jets. UAL Corp.'s United Airlines said it will
shrink its domestic flying by 15-20 jets.
Last week, jet fuel prices in New York were 147% higher than the previous year,
reaching $3.30 a gallon. Airlines have pushed fares higher to cover some of the high cost,
but haven't been able to pass all the increase on to travelers without sharply curbing
demand for seats. Last month, domestic airfares were only 3.8% higher than in February
2007, according to the Air Transport Association.
Airlines now have to ground planes to stem losses, but even small cuts hurt the networks
of hub-and-spoke airlines significantly. Take a planeload or two of passengers off a
schedule of connecting flights, and other flights may lose a few passengers, making each
of them less profitable. The entire system weakens financially -- one reason airline losses
can start to pile up very quickly.
The Las Vegas midnight flights began 15 years ago when America West Airlines
gambled that it could build a schedule around the 24-hour nature of "Sin City." The
company found even more demand for flights on the East Coast after it merged with US
Airways in 2005. Vacationers could gamble all day and into the evening at the casinos
before showing up for their flights -- or arrive in the middle of the night and find hotel
services and activities in full-swing. Visitors could even gamble right up to departure,
parking themselves at one of the many slot machines at the airport itself.
"It's the one destination that people will fly even late at night to get there," said Mr.
Kirby.
Operating the night flights can make financial sense for airlines since the extra flying just
adds staff costs, some maintenance expense and jet fuel -- gates, airplanes, headquarters
and other fixed costs are already paid for. Instead of being parked at airports overnight,
planes fly. The economics allow airlines to offer cheaper ticket prices. About 80% of the
customers using the nocturnal flights are leisure passengers, US Airways says, and many
of them are drawn to the odd hours by cheaper prices.
Bill Keiser, a retiree from Detroit, flew home recently on a midnight flight so he could
get an extra day of fun in Vegas. "The later the better," he said of the flight's schedule.
Amy Gall thought the overnight flight home to Chicago was a great idea, too, when she
booked her trip. At the airport, however, she was dreading the trip -- and having to be at
work in the morning shortly after her scheduled 5:30 a.m. landing. "If you were not
coming off a Las Vegas vacation, this wouldn't be bad. But in Las Vegas, you're up all
night anyway. I haven't had much sleep," she said.
US Airways' Mr. Kirby says Las Vegas is probably the only place a middle-of-the-night
hub would work. The operation needs connecting passengers to fill planes, but couldn't
exist without the local customers. Las Vegas is likely the only destination that could get
so many people to the airport in the middle of the night.
But because fuel is a much bigger factor in each flight's total cost, those flights are more
vulnerable to high fuel prices. "When fuel goes up, the night system's profitability is
affected the most," said Mr. Kirby.
The operation remains profitable for now, he says. "But will it be profitable if oil stays at
$102 a barrel? That's a much bigger hurdle."
Write to Scott McCartney at middleseat@wsj.com