Gaming won't suffer much from airline fare increases

Wall Street gaming analysts don't see Friday's air fare increases as a major threat to big hotel-casinos that rely on airlines to deliver a steady stream of customers.

But that's not to say they're pleased with the increases.

"Anytime you see an increase in leisure fares, it's a negative for leisure destinations," said Jason Ader of Bear Stearns & Co. "Fare increases historically create resistance among consumers who look for other alternatives.

"On the other hand, most leisure destinations will see the same price boosts, so the prices are higher for everybody.

"It could be good news for National Airlines," said Ader, referring to the new low-far carrier based in Las Vegas that will begin flights this spring.

"If its competitors are charging higher prices, National will have a higher price umbrella for their introductory fares.

"The more important issue is demand," Ader said. "If the new resorts such as Bellagio, Mandalay Bay, Venetian and Paris-Las Vegas stimulate demand, then National is in a perfect position to benefit."

But Harry Curtis of BancBoston Robertson Stephens said the fare increases shouldn't pose a threat to Las Vegas tourist traffic.

"I think a 4 percent increase probably won't have a measurable impact on Las Vegas," Curtis said. "Much of the booking is done on a tour-and-travel basis anyway. The better question is whether this will have any impact on tour-and-travel fares."

"If you make your reservations far enough in advance, 4 percent won't be the end of the world," said Dave Ehlers of Las Vegas Investment Advisors Inc.

"But there's a lot of elasticity in demand, so if you boost ticket prices by 4 percent, there will be some effect on demand. The good news is that the increase isn't 20 percent.

"More important to Las Vegas is what happens with National Airlines," Ehlers said. "National is our only hope for significant increases in air service because Las Vegas ranks last in yield among the top 30 U.S.airline destinations."

Ehlers noted that the 11.3 cents of revenue per available seat mile carriers get flying into Las Vegas is 20 percent below that of the next lowest-yielding destination, Orlando. That deters airlines from adding seats to the Las Vegas market because they can earn more flying to other destinations.

Las Vegas visitor volume was virtually flat for 1998's first 11 months, with with airline traffic down slightly and auto traffic, especially from Southern California, up 4.4 percent for the period.

About 44 percent of Southern Nevada's 28.2 million visitors through November arrived by plane.

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