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Tourism and Gaming
Can new WestJet code-share help Las Vegas?
By Richard Velotta / Staff Writer

A WestJet plane taxis on the runway of Pearson International Airport in Toronto in 2005.
BLOOMBERG NEWS FILE PHOTO

When Southwest Airlines last week signed a memorandum of understanding with Canada's WestJet to develop a code-share agreement, numerous questions emerged.

What will this mean for Southwest passengers? Is Las Vegas going to benefit from this relationship? And what is this WestJet airline, anyway?

Because the ink has barely had a chance to dry on the memorandum, there isn't a lot of information to pass along. But on the key question of whether this deal can help Las Vegas, I'll offer some speculation on a scenario that could play out if local tourism leaders act.

First, what is WestJet? Although Southwest is a well-known commodity to most Las Vegans who travel, WestJet isn't quite a household word. But it is in Canada.

In fact, it could be argued that WestJet is now the Canadian equivalent of Southwest up north. And, it's Southwest on steroids.

Launched in 1996 as a carrier "loosely modeled after Southwest," according to company spokesman Robert Palmer, WestJet started the same way as Southwest - as a small regional carrier focused on a small group of cities. While Southwest's business model of flying between Houston, Dallas and San Antonio was drafted on a napkin by three entrepreneurs, four former pilots drew up WestJet's plan of flying between Vancouver, Kelowna, Calgary, Edmonton and Winnipeg.

Today, Calgary-based WestJet has 400 flights a day to 47 destinations, flies more than 1 million passengers a month and has 7,000 employees. It's considerably smaller than Southwest, which flies the same number of passengers per month just to Las Vegas.

Like Southwest, the company has a fleet that is exclusively Boeing 737s and it has 75 jets, most of them fuel-efficient "next-generation" planes. The company has confirmed orders to add another 46 jets by 2013.

Also like Southwest, WestJet is operated by a publicly traded company, and its stock is listed on the Toronto Stock Exchange.

Both companies also have corporate cultures that encourage creativity so it isn't uncommon for WestJet flight attendants to perform preflight announcements in rhyme or limerick.

Palmer said WestJet has been successful by bucking the trends of its competitors, the largest of which is Air Canada. WestJet's costs are more than 25 percent lower than Air Canada's, primarily because it is completely nonunion.

Palmer said an association called the Pro Active Communication Team serves in place of unions and has a seat on the board of directors and at all negotiations. The team is consulted on most major decisions and it assures employees are treated well, receive good compensation and participate in profit-sharing.

"While most Canadian carriers are experiencing capacity reductions, we're screaming up in the passing lane," Palmer said.

Like Southwest, WestJet employs technology to cut costs, using a navigational performance software and winglets to trim fuel use. WestJet also has used some innovations to cut costs. They fly slower, lengthening flights by four or five minutes but saving fuel. The company also discovered that it could cut corners by lessening the amount of potable water it flies with. Instead of filling water tanks to capacity, officials determined average use on flights and made it policy to carry just enough to cover those averages.

Southwest and WestJet diverge in the areas of international routes and in-flight entertainment.

WestJet has installed state-of-the-art seat-back entertainment systems for passenger use with free satellite TV and pay-per-view movies.

In 2004 the airline went international, calling those routes "transborder flights," to Los Angeles; San Francisco; Phoenix; Fort Lauderdale, Tampa and Orlando, Fla.; and New York. The airline subsequently dropped San Francisco and New York, but added Newark, N.J., earlier this year.

In 2005 the airline expanded to Las Vegas where it currently has 39 round trips a week and provides the second largest number of flights to and from Canada behind Air Canada. That could change later this year. WestJet will begin flights to and from Abbotsford on Sept. 8, Victoria on Sept. 9 and Saskatoon on Sept. 10. Palmer said a new destination from Las Vegas also is expected to be announced within a month.

So how will the Southwest-WestJet code-share work? Palmer and Southwest spokeswoman Brandy King said that's what executives for both carriers will be hammering out between now and late 2009 when the deal takes effect.

But based on the way the airlines are structured now, Las Vegas is the point on both route maps that have the most flights to and from Canada. Other Southwest cities served by WestJet include Los Angeles; Phoenix; and Tampa, Fort Lauderdale, Fort Myers and Orlando in Florida.

In an interview the Associated Press conducted with Southwest Chief Executive Gary Kelly, he indicated he wouldn't be disappointed if WestJet decided to fly to Baltimore (one of Southwest's East Coast strongholds) or Chicago (presumably to Midway Airport, where Southwest is huge).

But as of today, Las Vegas is the biggest city served by both airlines. That could mean that McCarran International Airport could become a key transfer point in the code-share agreement. That isn't exactly good news for Clark County Aviation Director Randy Walker, whose mission is to foster flights that would fill hotel rooms, not serve as a place for people to change planes.

And don't look at the Southwest-WestJet deal as a means for Southwest customers to go to places such Honolulu; Mazatlan, Mexico, or the Caribbean (all served by WestJet). King said Southwest is in negotiations with several other airlines for code-share deals that would link Southwest customers to Hawaii, Mexico, the Caribbean and even overseas.

So as things stand, the new code-share deal with WestJet doesn't look to benefit Las Vegas much, since locals already can buy tickets and access the WestJet network from McCarran.

But there could be some benefits, if local tourism officials were to negotiate with Southwest and WestJet as this code-share deal germinates.

Remember Las Vegas-based National Airlines that operated in the early 2000s? It had a sweet deal for its customers that benefited the local tourism economy. National would allow passengers connecting on flights in Las Vegas the opportunity to overnight here at no extra charge. If local tourism leaders could negotiate such a deal in conjunction with the Southwest-WestJet code-share, the local economy would surely benefit.

This might not be easy. Airlines are reluctant to give away potential moneymakers. They'd rather sell a future ticket to Las Vegas than allow a connecting passenger the opportunity to get off the plane at no charge. So maybe McCarran could make it worth Southwest's and WestJet's while with some incentives.

How about reducing the landing fees a certain percentage for a flight if there are passengers who choose to stay in Las Vegas a night or two? If such a policy were successful in adding room nights in Las Vegas, it's possible that Southwest or other carriers could offer the same deal for their customers.

King reiterated that it was still too early for Southwest to consider any specifics on the code-share, including this overnighting-in-Las Vegas idea. Palmer called the idea "interesting" and that he sees the benefit of offering WestJet customers the perk of being able to add a visit to many Canadians' favorite resort city at no charge.

Local tourism leaders should get on this right away while the code-share news is still fresh.

In other tourism news:

Gov. Jim Gibbons announced five appointments to the Nevada Tourism Commission that effectively shifts the membership balance to Northern Nevada's favor.

It's an interesting move, considering that it's perceived that Southern Nevada has a greater dependence on tourism than the more economically diverse north and some would argue that there's more expertise in Southern Nevada's larger universe.

Appointed to the 11-member board headed by Lt. Gov. Brian Krolicki were Eric Bello, vice president of sales for Las Vegas Sands Corp.; Cindy Carano, executive director of hotel operations at Eldorado in Reno; Blaise Carrig, chief operating officer of Heavenly Mountain Resort in South Lake Tahoe; Bruce Dewing, general manager of AWI Gaming-Sturgeons Inn in Lovelock; and Ryan Sheltra, general manager of the Bonanza Casino in Reno.

They replace eight-year commissioner Van Hefner, chief executive of the Las Vegas-based Nevada Hotel and Lodging Association and the Nevada Restaurant Association; 12-year commissioner Irwin Kishner, owner of Somerset House, a nongaming motel just off the Las Vegas Strip; eight-year commissioner Ray Pearson, co-owner of Winnemucca's Winners Hotel; and eight-year commissioner Chuck Scharer, retired chief executive of Harveys in Lake Tahoe. Sheltra was appointed to a full term after filling an unexpired term. The Reno executive studied at UNLV and formerly worked at Caesars Palace and the Las Vegas Hilton.

By statute, the membership of the commission must include executives from the Las Vegas Convention and Visitors Authority and the Reno-Sparks Convention and Visitors Authority and two representatives from rural counties.

In recent years, the commission's focus has been on boosting the tourism fortunes of rural Nevada, but some of the biggest issues have dealt with Northern Nevada concerns, such as the controversial use of sales tax anticipated revenue bonds - STAR bonds - to finance tourism improvement districts.

Those have been controversial because Reno-area tourism improvement districts have revolved around large commercial projects and some taxpayers perceived pledging sales tax revenue to the bonds as a form of corporate welfare for anchor companies building in the development.

Although some say the governor's appointments are a snub to Southern Nevada, they are also an acknowledgment that Southern Nevada's tourism strategy is in good hands with the LVCVA. The irony of that, of course, is that Gibbons' lone Southern Nevada appointment, Bello, works for a man who would just as soon see the convention authority dissolved, Las Vegas Sands Chairman Sheldon Adelson.

There may be some interesting discussions ahead in Tourism Commission meetings with Bello, LVCVA Chief Executive Rossi Ralenkotter and former LVCVA Board Chairman Lorraine Hunt-Bono on the board.

Everybody knows that airlines are taking extreme measures to cut costs and generate additional revenue while getting hammered by high fuel costs.

The latest cut: US Airways will begin ripping the entertainment systems out of the jets they use for domestic flights beginning Nov. 1 and no longer will provide in-flight entertainment on those routes.

The airline reported that the systems that provide movies and music weigh about 500 pounds - the equivalent of about three passengers - and removing that weight would lighten the load planes must carry.

Officials said the number of people paying $5 for headsets has dwindled and removing entertainment systems will save the company $9.5 million a year in fuel consumption.

The company says customers who want in-flight entertainment often bring their own gadgets such as iPods, DVD players or laptop computers rather than buy headsets.

US Airways plans to keep entertainment systems on their wide-bodied jets (used primarily for overseas flights) and on Boeing 757 jets that travel on over-water routes. In October the company will test a lightweight seat-back entertainment system on one of its Airbus A320 jets that is expected to have touch-screen technology, feature customized content on demand and Internet access.

US Airways rival Southwest Airlines also is looking to test an in-flight Internet product in the fall.

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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