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Tourism and Gaming
A Delta-Northwest merger won't hurt LV much
By Richard Velotta / Staff Writer

The proposed merger of Minneapolis-based Northwest Airlines and Delta Air Lines of Atlanta shouldn't have a huge effect on Las Vegas consumers and the local tourism economy - unless you consider the potential of higher ticket prices to be a problem.

But if other carriers catch the fever, it could be a whole new ballgame, especially after three airlines already have quit operating.

Legacy carriers Northwest and Delta operate strong hub-and-spoke operations, a system that enables them to fly small planes into a broad number of markets and funnel traffic into a hub - a large airport where many passengers change planes to make connections to their destinations.

In general, Las Vegas is a "spoke" to Northwest's hubs in Minneapolis, Detroit and Memphis, Tenn., and Delta's hubs in Atlanta, New York, Salt Lake City and Cincinnati. That means most of those airlines' flights from Las Vegas are to those cities.

At one time, Las Vegas was a spoke to one of Northwest's international hubs, Tokyo, resulting in Las Vegas' first nonstop trips from Asia.

But because Las Vegas is a market some of the big carriers have experimented with in the past, McCarran International Airport has had some point-to-point service with Delta and Northwest.

When Delta introduced a low-cost subsidiary called Song in 2003, it flew directly to Las Vegas from some nonhub locations. When Delta discontinued Song in 2006, it decided to keep some of its best routes, and some of them still exist today.

In addition to 61 round trips a week to Atlanta, 26 a week to New York's John F. Kennedy International Airport, 28 to Salt Lake City and 18 to Cincinnati, Delta has five a week to Boston, four a week to Fort Lauderdale, Fla., and seven a week on a commuter partner to Los Angeles International Airport to accommodate international traffic. Delta has announced that four round trips a week to Orlando, Fla., will end next month.

Meanwhile, Northwest has 42 flights a week to Minneapolis, 28 a week to Detroit and seven a week to Memphis. In an effort to accommodate loyal customers in the Midwest, Northwest tried some point-to-point service to Las Vegas - mostly in a bid to discourage competition from locally based Allegiant Air in markets such as Sioux Falls, S.D. Today, a daily round trip to Indianapolis is all that remains of that experiment, and the company also has one daily flight to Los Angeles International to accommodate international traffic transferring from Asia.

Of all the airlines at McCarran, it's Delta that brings in the most jumbo jets, which explains why it has the fourth highest market share of seats to the market while having fewer flights than American Airlines. Of the approximately 140 flights a week Delta operates in Las Vegas, 110 are on Boeing 767 jumbo jets or high-capacity narrow-body Boeing 757s.

Incidentally, the two carriers have announced the merged company would be known as Delta, the corporate headquarters would be in Atlanta and there are no plans to downgrade any of the existing hub airports.

Since merging and consolidation are all about eliminating overlaps and consolidating flights (and cutting fleet and staff), where would the new Delta save money if it doesn't downgrade some of its hubs? That's a question regulators likely will be asking when it comes time to approve the merger. For that matter, so will shareholders for both companies, who also have to sign off on the deal.

As for Las Vegas, the only overlap the carriers have are those two single flights each have to and from Los Angeles. Would Las Vegas be the worse if either or both of those flights went away? Not likely, since, with an average of 33 1/2 flights a day to that market on six different airlines, that is the busiest route out of our local airport.

It's also questionable whether the new Delta would keep all those hubs operating at their current levels. One need only look at the recent US Airways-America West marriage to see a shift from announced intentions and today's reality. US Airways' Las Vegas hub capacity has fallen off dramatically from a year ago, with 23.6 percent fewer flights now than there were in April 2007.

US Airways' hub in Pittsburgh is gone, which has produced bitterness in that city.

One other thing to consider is that the Delta-Northwest merger may not be a done deal. Democratic Rep. James Oberstar of Minnesota has promised to ask some tough questions about the plan. Who can blame him? Not only would the Northwest name disappear from the aviation landscape, but one of his state's major corporations and much of its community goodwill is moving to Atlanta.

Oberstar, you may recollect, was the congressman who some critics have accused of being responsible for the Federal Aviation Administration's overreaction to comments he made about the coziness of relationships between regulators and airlines.

When Oberstar spoke, the FAA jumped, grounding thousands of American Airlines jets, inconveniencing hundreds of thousands of passengers and slapping a $10.2 million fine on Southwest Airlines for a problem that, by all accounts, had been solved months earlier.

Delta wants to fast-track the merger before President Bush leaves office, believing that a Republican administration would look more favorably on the deal than a Democratic one.

One of the things the Delta-Northwest deal already has accomplished is that it has gotten other big carriers to reconsider their positions.

Chicago-based United Airlines and Houston's Continental Airlines have been rumored merger partners for years. Even US Airways was rumored to be a possible partner for United or Dallas-based American.

US Airways Chief Executive Doug Parker is a big advocate of industry consolidation. When the rumors about US Airways hit the media, he felt compelled to communicate directly with his employees.

"Most of you know my views on consolidation, and those have not changed," Parker told employees in a memo. "Our industry is far too fragmented and consolidation, if done properly, could result in a much healthier industry, which would be good for our employees, our customers and the communities we serve. Rest assured if US Airways chooses to participate in any industry consolidation, we will do so because we believe it is the best interests of our employees and our airline."

He added that the Delta-Northwest deal could force others to act.

"We can't ignore what's happening in the world around us," he said. "Oil has risen to over $113 per barrel, and Wall Street is anticipating a recession that, if it happens, will lower all airline revenues. And the Delta-Northwest combination potentially creates a formidable competitor. In that world, all airlines are going to have to make dramatic changes to their existing business models in order to be viable."

Critics say the merger would increase ticket costs. And that may be the price Las Vegans pay for this mergers and others if they occur.

In other tourism and gaming news:

- Airlines routinely oversell their flights because they know about how many people won't show up for a given flight for one reason or another. What results is that some passengers are involuntarily denied boarding if more people show up than they expect.

Airlines are supposed to compensate customers when that happens. The level of compensation is based on how late the airline's alternative rerouting plan takes. On domestic flights, if you arrive less than two hours behind schedule, you're supposed to get $200 in compensation. For more than two hours, it's $400, based on rules established by the Transportation Department in 1978.

But last week, Transportation Secretary Mary Peters said beginning next month, compensation will be double to $400 for solutions that take less than two hours and $800 for those more than two hours.

In addition, the secretary said the department has negotiated an agreement to divert aircraft into Canadian airspace as a means of cutting down weather-related flight delays.

- Starting May 7, US Airways, the second-busiest air carrier at McCarran, has a new way to raise revenue and to get into your wallet.

The company is introducing "Choice Seats," which will require passengers to pay an additional $5 per flight if they choose to sit in window or aisle seats toward the front of the coach cabin. The airline said about 8 percent of a plane's seats would be designated "Choice Seats," so if you have no problem sitting in the center seat or seat or toward the back of the plane, you won't need to pay the additional fee.

The airline's frequent fliers aren't subject to the additional fee, which is paid when passengers use Web Check-In 24 hours to 90 minutes before flight time. Later this year, Choice Seats will be available through kiosk and ticket counter check-ins at the airport.

In its announcement, US Airways said Choice Seat purchases occur by flight segment so a Las Vegas traveler flying, for example, to Philadelphia with a change of planes in Phoenix would have to pay the fee for each leg of the trip.

- Arizona Charlie's Decatur marked its 20th anniversary in Las Vegas with a rededication ceremony and ribbon-cutting last week.

Named for Charlie Meadows, a cowboy and performer in Buffalo Bill's Wild West Show, the property opened on April 22, 1988.

Former Las Vegas Mayor Ron Lurie has served as executive vice president and general manager of the property, owned by American Casino and Entertainment Properties, for the past 17 years.

- Two airlines have announced new service, one to the benefit of Las Vegas consumers and the other that should enrich a local company.

Horizon Air, a subsidiary of Seattle-based Alaska Air, inaugurated nonstop round-trip service between Sonoma, Calif.'s Charles M. Schulz Airport in Santa Rosa, Calif., and McCarran.

The two-hour-and-five-minute flight leaves Santa Rosa, the heart of Northern California's wine country, at 7:35 p.m., and returns from Las Vegas at 10:15 p.m.

Horizon is using a 76-seat Bombardier Q400 twin-engine turboprop aircraft for the route.

Meanwhile, Las Vegas-based Allegiant Air is expanding its Bellingham, Wash., operations by adding two new routes - San Francisco and San Diego.

Allegiant has built quite a side business in Bellingham after basing two of its MD-80 jets there, with direct routes to Phoenix, Reno and Palm Springs, Calif., as well as Las Vegas.

The new Allegiant routes to San Francisco International begin June 6 and to San Diego on June 12.

- About 100 helicopters fly between Las Vegas and the Grand Canyon every day, and Clark County officials are hoping to take them out of urban airspace, which should reduce noise to thousands of Las Vegan who live beneath their flight paths.

On May 1, from 4-7 p.m. at the Clark County Government Center cafeteria, there will be a public workshop on the proposed Southern Nevada Regional Heliport, which would be located on 229 acres just east of Interstate 15 about 5.5 miles south of St. Rose Parkway near Sloan.

A public hearing is scheduled on the draft plan at the Clark County Commission's May 6 meeting at about 10 a.m. at the Government Center.

Copies of the plan can be seen at Southern Nevada's 20 libraries or online at www.ricondoprojects.com/heliport.

Richard N. Velotta covers tourism for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4061 or by e-mail at velotta@lasvegassun.com.

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