Factors look good for LV based airline's success

Michael Conway's bid to put National Airline Inc. in the air could soar, experts who follow the airline industry say.

"It all seems right," said Mike Boyd, a consultant with Boyd Group/ASRC, of Evergreen, Colo. "He's in the right place at the right time with the right airplane."

"Vegas is a good place to start a low-fare carrier," added Terry Trippler, publisher of airfare-report.com, a World Wide Web site devoted to tracking fares. "Low-fare carriers are a way of life there because everybody's looking for a bargain."

Boyd said the Boeing 757, the plane upon which Conway plans to build his airline, is perfect for the Las Vegas market because it is more fuel efficient than most of the older jets in the air and has a larger capacity than the Boeing 737, the workhorse of the fleets of the airlines that presently serve Las Vegas.

He added that because Conway is an experienced airline executive, he should avoid some of the pitfalls that await most start-up companies.

"Conway should be highly successful in this business, though it's a rotten business to be in," Boyd said of the highly competitive airline industry. "As for Conway getting back in, it's like reupping to go on another tour to Vietnam."

Maurice Gallagher, one of the founders of ValuJet, a low-fare air carrier that served the Southeast in the 1980s and early 1990s, said Las Vegas is an excellent market from which to launch because no other carrier dominates the market here the way most major airlines exploit their hub cities.

"America West and Southwest Airlines have a lot of activity here," Gallagher said, "but Las Vegas is an end point for any other carrier. So a new airline is not attacking anybody's market."

Gallagher, presently chairman of the board for MGC Communications Inc., a local telephone company serving Southern Nevada, also said Conway has to be encouraged because the economy is offering the best times the airline industry has ever seen.

Although the experts concurred they are impressed with Conway's game plan, they said National Airline could encounter turbulence in its start-up bid. Some of the potential problems:

-- Federal Aviation Administration approvals. In order to be flying within six months as Conway hopes, National Airline would have to receive certification from the FAA and the U.S. Department of Transportation. Boyd said the FAA, which monitors safety in the industry, is ill-equipped to speed through a certification process. Conway has built the certification process into his timetable, but delays are possible because of staffing issues and occasional political squabbles, Boyd said.

* Ineffective marketing. Trippler is convinced Western Pacific Airlines' failure to stay afloat was due to ineffective marketing. He said in order for Conway's airline to be successful, he must partner with travel agencies and lock in what little business travel market there is in Las Vegas.

Trippler said a recent start-up airline that has set a new standard for success is Detroit-based ProAir -- a company that earlier this week announced plans for twice-a-week service from Detroit to Las Vegas beginning in December.

"They just signed a contract with GM (General Motors) and Chrysler to fly executives to Philadelphia, Baltimore, Newark and Indianapolis," Trippler said. "They're beating Northwest (Airlines) in their own hub."

Conway's strategy is geared more toward the leisure market and, in fact, has two casino operators as investors. Gallagher said it is imperative that the new airline properly structure fares against costs in a city with historically low margins due to the tourist market.

With more than $47.3 million invested at start-up -- $20 million more than any other new U.S. airline -- Conway will have plenty of cash available to do the marketing plan correctly. Boyd, however, is nonplussed.

"Money is always a problem," he said. "I don't care how much you have."

--- Stepped-up competition. The experts are split on how far existing carriers will go to meet competition to be offered by National.

"Historically, most carriers have matched prices," Gallagher said. "Existing airlines won't be undersold."

Boyd, who said there are more markets in existence than National Airline will be able to handle, said he believes existing carriers will match fares to a certain degree, but that consumers shouldn't anticipate a price war as a result of the new airline entering the market.

"Carriers like American don't give a rip," Boyd said. "They'll say, 'Take the traffic, go with God, leave us alone.' "

In National's initial roll-out, the company plans to serve New York, Miami, Los Angeles and San Francisco from McCarran International Airport.

Trippler and Boyd pointed out that Southwest Airlines doesn't serve New York and that Miami is underserved by discount carriers.

Boyd doesn't think there is any particular customer loyalty on the Los Angeles-Las Vegas run and that the challenge will be to offer a fare low enough to draw people out of their cars.

"In that market," Boyd said, "the next piece of warm iron going there gets the business."

The primary carriers for the West Coast routes are Southwest Airlines and United Airlines' Shuttle by United discount carrier. Both use the Boeing 737 jet in their operations.

Trippler said the airlines most likely to be hurt by National's emergence would be America Trans Air, which offers some New York flights; and Reno Air, which flies the Los Angeles route.

"It would be hard to hurt Southwest or America West," Trippler said. "They have a strong presence and a good reputation in Las Vegas."

America West, which offers nonstop or one-stop service to all four of National's roll-out destinations, focuses primarily on late-night operations.

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