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October 18, 2018

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Las Vegas aims high with international plan

The word went out about Las Vegas a few years back when new megaresorts made their debut and the discount airlines answered the call.

Southwest Airlines and America West Airlines responded with high-frequency, low-fare service that now carries more than 1 million passengers a month through McCarran International Airport's gates.

Thanks to deregulation, airlines set their own fare structures. Like many resort destinations, Las Vegas became an inexpensive place to visit.

But it unexpectedly contributed to a new problem for the resorts. Leisure travelers, always on the lookout for good travel deals when they can get away from work, fill the many flights on the weekends. Midweek flights -- usually filled with business travelers at most major airports -- go out here with many empty seats.

Big carriers like United, American and Northwest, reluctant to commit their big jets to serve the leisure market where they make less money per seat than in business centers, haven't been impressed with the midweek lull and don't have the planes to commit to beefed-up weekend schedules.

United, recognizing the potential to serve leisure and business classes, stepped up its Shuttle by United service with small Boeing 737 jets, carrying passengers to hub airports in Los Angeles, San Francisco and Denver.

Southwest and America West have kept pace, establishing their own niches. Southwest, which carries the most passengers to McCarran, has maintained a high level of frequent departures. America West, which serves the most destinations from McCarran, capitalizes on Las Vegas as a 24-hour city and schedules most of its lowest fares on night flights. Both are conscious of market-share losses to upstarts Reno Air and Alaska Airlines, which have increased their presence in the city in the past year.

With a new wave of megaresorts coming on line in the next two years -- most of them boasting accommodations for the free-spending, high-rolling visitor -- marketers with the Las Vegas Convention and Visitors Authority have begun strategizing on how to fill about 20,000 new rooms when they open.

They're also looking at accomplishing a more daunting task -- filling all those new rooms and the existing 100,000 in the middle of the week when many resorts' vacancy rate percentages hit double digits.

While not turning its back on opportunities domestic air carriers may offer, a group calling itself the Las Vegas Parties has re-emerged with a plan to fill hotel rooms that extends beyond U.S. borders.

The Las Vegas Parties consists of executives from the Las Vegas Convention and Visitors Authority, McCarran International Airport, the Nevada Development Authority and the Las Vegas Chamber of Commerce. Their mission: to market Las Vegas to air carriers and foreign governments that make decisions that can affect overseas transportation.

William Mahaffey, the LVCVA's manager of transportation, said Las Vegas Parties re-established itself in the wake of concerns about filling hotel rooms. The group has formed the Joint Air Service Task Force to study the best ways to interest airlines and governments about travel to Las Vegas. Mahaffey, a former airline executive, and Harry Kassap, manager of air service development at McCarran, have the statistical resources of their agencies to make their case to airline marketers and aviation administrators.

For Mahaffey and Kassap, it's been a series of whirlwind tours. Over the weekend, they were in San Francisco for bilateral talks between the United States and Japan. This week, they'll check in with Canadian and Brazilian authorities. Next month, they may try to testify before Great Britain's Civil Aviation Authority, which is considering awarding a route between London and a U.S. destination.

Kassap said the biggest part of the Las Vegas sales pitch is educating people about some of its little-known strengths. For some audiences, that means reinforcing Las Vegas as the world's entertainment capital. For others, it's an explanation for the explosive population growth. He also presents the statistics for Southern Nevada's convention facilities and discusses business travel opportunities.

"The first hurdle is getting over the misconceptions about Las Vegas," said Kassap. "Many people don't get past the Strip resorts. They don't even look at the Levi Strauss distribution center or Ocean Spray. It's a matter of educating people about our work force and our population."

Kassap also said cultural differences sometimes present marketing challenges.

"In Muslim countries, gambling is not a popular ideal," said Kassap. "So we need to know going in if there's a cultural issue that has to be overcome."

Looking overseas for customers makes the most sense for marketing Las Vegas. After all, travelers who can afford international flights are likely to be the customers resorts want in their casinos. And, since most of them would rather avoid the crowds, they are likely to be off-season, midweek guests.

Last year, 18 percent of the 29.6 million visitors to Las Vegas were international travelers and that percentage was expected to grow in 1997. A decade ago, only 5 percent of the market was from beyond the United States.

McCarran already has its international infrastructure in place. Its international terminal has a U.S. Customs and Immigration center and the four runways at the airport are capable of handling any plane in the air today.

But getting airlines to bring flights to Las Vegas isn't an easy sell, simply because there are so many hurdles to clear, especially when they involve international routes. The main reason: Airline agreements often are established by treaties between the United States and foreign governments.

Bill Mosley, public affairs specialist with the U.S. Department of Transportation, said the U.S. is involved in 80 such agreements, ranging from the liberal to the restrictive.

About 25 are known as "open skies agreements," the most liberal of the pacts. Generally, those allow any carrier from either country to serve whatever city they choose. The airlines themselves have to negotiate landing slots and gate and counter space with the individual airports.

Bilateral agreements govern the rest of the relationships, and they're as varied as the nations themselves.

Mosley said State Department negotiators are trying to liberalize air agreements with a number of nations. What makes the negotiations complicated is that each nation wants what's in the best interest of its citizens. Meanwhile, airlines have their own interests of maintaining profits at heart. And, each city has its own agenda for why it should get international flights. While every city and airline stands behind its nation's negotiators, they jockey in the background for what's best for them.

Las Vegas is looking in all directions for international visitors. A summary of the city's global reach and what's on the horizon:

* Canada. The United States is looking to liberalize air agreements, but there already are some nonstop flights established. Canadian Airlines and Alaska Airlines have one flight a day each directly to and from Vancouver, British Columbia. American Airlines has a code-sharing agreement with Canadian allowing it to offer the flight to its customers.

* Mexico. Although it has the closest international boundary to Las Vegas, there are relatively few direct flights between Mexico and McCarran. America West has one nonstop flight a day to and from Mexico City. Mexicana Airlines recently began twice-a-week service on the route. Aeroejecutivo offers nonstops twice a week to Monterrey.

Sun Country Airlines, which offers a charter service, makes occasional flights between Las Vegas and Cabo San Lucas.

* Europe. Condor Airlines, a subsidiary of Lufthansa, broke new ground for Las Vegas when it began offering the first scheduled intercontinental flights to McCarran late last year. On Nov. 24, Condor is scaling back its Las Vegas service, a seasonal change that commits its jets to tropical destinations. Still, the German airline is offering weekly flights to Cologne, sharing a route with Denver. Every Monday, Condor flies a Boeing 757 from Cologne to Las Vegas to Denver back to Cologne.

A similar round-robin approach is being taken by Brussels-based CityBird, a discount carrier that bills itself as "the flying dream." For around $600 round trip for a coach fare, CityBird makes a circuit from Brussels to Los Angeles to Las Vegas back to Brussels.

Janet Gorecki, manager of North American sales for Condor, did not disclose the airline's plans, but said the company "is not unhappy with what is going on with Las Vegas right now." According to McCarran statistics, Condor is on a pace to carry close to 25,000 passengers in 1997.

CityBird just started its weekly service and has no meaningful statistics on its loads.

One of the most enthusiastic potential air carriers to Las Vegas is London-based Virgin Atlantic Airlines. Headed by popular entrepreneur Richard Branson, Virgin Atlantic is about a month away from learning whether it will win a single international route available from London to the United States.

Britain's Civil Aviation Authority will make the selection after hearing testimony. Las Vegas Parties has volunteered to speak on Virgin Atlantic's behalf.

Competing with Virgin Atlantic is British Airways, which wants to fly directly between London and Denver. Branson has been a vocal critic of the British Airways' proposed alliance with American Airlines, which he calls "the merger from hell." He's even painted a message on some of his planes -- "No way BA/AA" -- as a flying reminder of his distaste for the alliance.

"Virgin would love to fly to Las Vegas," said Gareth Edmonson-Jones, manager of industry and public affairs at Virgin's U.S. headquarters in Norwalk, Conn. "Las Vegas is the entertainment capital of the world and we are the quintessential entertainment company."

Branson is interested in Las Vegas, opening a Virgin Megastore that sells CDs, tapes and computer software at the new wing of The Forum Shops at Caesars. He's also publicly stated that he wants to build a hotel-casino here.

"There's great interest in desert vacations in the Southwest," said Edmonson-Jones. "With Las Vegas teaming up with Phoenix and San Diego (a tourism alliance established earlier this year by the LVCVA), we'd love to play a hand in that."

If Virgin is successful, it could begin flying its jets with inflight manicure and massage service and a library of movies and video games in individual units at each seat sometime next year. Virgin also has ordered a new generation of Airbus 340-600 jets that will have bedrooms, gym equipment and showers on board.

* Asia. McCarran's Kassap and the LVCVA's Mahaffey are awaiting the outcome of negotiations with Japan. City officials are encouraged by progress made in the last year. In October, two charters through the Japan Travel Bureau flew directly to Las Vegas from Tokyo and the first flight merited a red-carpet welcome from Gov. Bob Miller, Sen. Richard Bryan and a host of city and county officials.

Privately, officials close to the negotiations aren't optimistic that direct flights between Las Vegas and Japan are on the horizon because of the tough stance taken by the Japanese government, which wants to protect its primary air carrier, Japan Airlines.

Northwest Airlines is advocating nothing short of an open skies treaty with Japan, but it would stand to gain if no agreement is reached because it already has direct routes to Japan in existing pacts.

Kassap said there are alternatives available if talks with Japan break down.

"To us," said Kassap, "Japan would be ideal. But if Japan isn't going to happen for Las Vegas, we'll investigate Korea, Malaysia, Taiwan and China."

* South America. Talks are beginning this week between American and Brazilian authorities.

While the Las Vegas contingent has focused on the city as a destination to benefit the resorts, it's also talking up McCarran as an international gateway. And some airlines are bound to listen.

"We have some great advantages over neighboring airports," said Kassap. "There's no airport congestion, we have four carrier-length runways and good weather. We also have a classic customs facility."

Airlines looking at the bottom line can maximize profits because McCarran's landing fees are so low. A recent survey by the American Association of Airport Executives showed the average fee per thousand pounds of landed weight in large U.S. hub airports is $1.79. McCarran's fee: $1.18. By comparison, Denver International Airport charges $3.33, the fee at John F. Kennedy International in New York is $2.90 and Orlando, Fla., charges $2.20.

Landing fees, which generate cash for the airport's general operating fund, can be kept low because McCarran has a steady stream of nonairline-related revenue -- slot machines, concessions and a huge chunk of advertising income.

"There's a lot of America West, Reno Air and Southwest flights available to take people wherever they want to go once they get to the United States," said Mahaffey in making a case for a Las Vegas port of entry.

"Clearing customs in Las Vegas is a lot easier than going through Los Angeles, where you have to sit on the runway for five hours waiting for 28 planes to take off ahead of you."

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