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LAS VEGAS-Clark County’s Board of Commissioners on Wednesday voted to award Perini Building Co. a $1.2-billion contract for the $1.8-billion expansion of McCarran International Airport. The decision to move forward with the project was made despite a protest from the losing bidder and a written request from an airline company that the expansion be reconsidered because it would be paid for by higher passenger fees.

The expansion project consists of the construction of a three-floor, 1.9 million-sf terminal and associated infrastructure. The infrastructure includes an elevated roadway system, baggage handling system, 14 aircraft gates, federal inspection services and three pedestrian bridges from terminal to parking.

Bids were received and opened one month ago. Subsequent to the bid opening, the other bidder, a joint venture of McCarthy Building Cos. and Kiewit Construction Co., filed a protest alleging that for certain reasons Perini was not the best bidder despite its bid being more than $200-million lower. Staff reviewed the protest, interviewed the parties involved and still recommended Perini as the best bidder.

The written request to delay the vote came from Southwest Airlines, which handles more than 40% of all passengers at McCarran. “The current state of the industry is at an all-time low and there is much uncertainty as to what the future holds,” Southwest’s property manager Linda Macey states in the letter. “We request that any non-essential expenditures be deferred and that all remaining projects be re-evaluated for any and all cost savings potentials.”

Though not stated specifically in the letter, one of the airline’s concerns is that its rising ticket prices and new fees, when combined with the new fees the airport will implement to pay for the expansion, will cause more people to fly less, worsening an already troubled industry.

As is, McCarran is design to handle 42 million passengers annually. Last year, about 44.3 million people squeezed through the terminal, which handles most of McCarran’s domestic airline arrivals and departures. This year, passenger volume is running 2.4% behind last year’s numbers, according to the most current numbers available; if the trend holds true, the airport would handle approximately 41.3 million passengers in 2008.

What happens in 2008 isn’t as important as what passenger traffic will be when the terminal is completed in 2012, which is when the last of some 30,000 new hotels rooms now under construction will have been added to the market. More than 5,000 rooms have been delivered so far this year and an additional 20,000 or so rooms are expected to come on line before the end of next year.

Indeed, some of the county commissioners, in awarding the airport expansion contract, determined that what may be good for the airline industry in the short term would not be good for the Las Vegas hotel industry in the long run. Their reasoning is that to get hotel occupancies back up to 90% after the new rooms come online, a 9 million increase in annual visitors — 300 people for every new hotel room — will be required. That wouldn’t be possible without an additional terminal, according to county officials.

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