Reno Air climbing in Las Vegas

Monday, May 12, 1997 | 11:59 a.m.

RENO -- Reno Air CEO Robert Reding has a nice view of Reno/Tahoe International Airport from the two-story office about a mile from where his company's twin-engine jets land and take off 88 times a day.

"The wind can be a little tricky for pilots around here," Reding said as another MD-80 set down under a sky filled with patchy clouds.

Reding should know: He's a licensed pilot and has taken the MD-80 and its look-alike upgrade, the MD-90, for a spin.

The mountainous terrain of Northern Nevada and the desert thermals of Southern Nevada produce their share of choppy air, but Reno Air's 307 pilots persevere. It's a fitting analogy to Reno Air itself -- the company has endured some choppy times, but now it's now exploiting some niches in some highly competitive markets.

Next week, Reno Air's bid to grow market share focuses on Las Vegas when the airline doubles the number of flights it offers at McCarran International Airport. On May 22, Reno Air will increase the number of round-trip operations from five to six to Reno, from two to three to Colorado Springs, Colo., and to Tucson, Ariz. It also will add three new operations each to San Diego, Los Angeles and Albuquerque, N.M.

The new operations have resulted in the company adding about 22 full-time employees in Reno Air's customer service departments.

In addition, Reno Air has opened a new reservation center in Las Vegas, adding 200 more jobs with the potential for at least 100 more at full build-out.

"We're the only Nevada-based commercial air carrier," Reding said of the company that has become the nation's 11th largest airline, serving just under half a million passengers a day.

To Reding, Las Vegas is a perfect fit for the company. In addition to being a growing tourist destination and a burgeoning metropolitan market, the city is close to the geographic center of the core of Reno Air's route map. As a result, the company has structured its new timetable for maximum connection opportunities. In essence, McCarran will become a "mini-hub" for the airline.

"Everything we do out of Las Vegas is very profitable for us," said Steve Sarner, vice president of marketing and sales. "We're encouraged by the advanced bookings we've received for Las Vegas. It's growing as fast as any market we've started up in."

Officials at McCarran are optimistic that Reno Air's expansion could be the first of many.

"It bodes well for the future," said Harry Kassap, air service development coordinator at McCarran. "We're hoping this expansion is just a first step."

Mike Boyd, an analyst with Aviation Systems Research in Golden, Colo., said Reno Air is at the right place at the right time.

"Reno has a great reputation," said Boyd. "In all the time I've followed them, I've never heard of a complaint against them. And now, they're going into a market that's just going gaga."

Although the future looks good for Reno Air in Las Vegas, it hasn't always been a smooth trip for the company.

As a start-up airline in 1993, it took Reno Air three years to become profitable, losing $21 million in its first two years but recovering about $2 million each in 1995 and 1996.

Just when it appeared Reno Air was on a profitable track, disaster struck, literally, in early 1997. When the Truckee River crested on New Year's Day, water swamped the airport tarmac and all the airlines serving the Reno airport canceled operations. Despite sandbagging efforts, the airline's reservation center was flooded and a Southern California company that has handled Reno Air's emergency overload was pressed into service.

When it was over, the airline lost 257 flights in January -- five times the normal cancellation rate. That came during a period when aviation fuel costs were climbing and all the airlines saw their bottom lines plummet as a result. The end result -- a $5 million loss for the quarter.

Although January was a washout, Reding said the company is recovering nicely. In March, traffic grew by 17.8 percent over 1996 totals. In April, the count was up 4.3 percent over the previous year. The schedule modification should result in even more available seat miles since volume is being added without increasing the number of aircraft.

Reno Air experienced more turbulence in its early going. Last month, the company filed suit against Northwest Airlines, accusing the Minneapolis-based carrier of predatory pricing when Reno Air inaugurated service between the two cities in April 1993.

Northwest disputes the antitrust claim, saying it was only using proper competitive tactics.

Whatever the case, Reno Air no longer serves Minneapolis.

Although the future looks bright for Reno Air, it won't be without challenges.

Shuttle by United recently entered the Reno market. In Las Vegas, the company goes head to head with Southwest Airlines and America West, the two market leaders, on many of its routes. Reding hopes to differentiate Reno Air from Southwest, which he considers his biggest rival, by offering better service for the same price.

"We like to consider ourselves as having Southwest prices with American Airlines service," said Reding.

Reno Air tries to earn a competitive edge over Southwest by matching its fares and offering a first-class section on its planes and advance seat assignments.

"They're a good alternative, especially to Reno," said Dennis Casteel, a travel agent with Travel Inc. in Las Vegas. "Fare-wise, they're always the same (as Southwest). And customers like the advance seat assignments and not having to jostle around once they're at the airport."

Reno Air has torn a few other pages from Southwest Airlines' operations manual.

Like Southwest, Reno Air uses only one type of aircraft, which cuts maintenance and training costs. Unlike Southwest, Reno Air flies the MD-80 and MD-90 series jets produced by McDonnell-Douglas. Reno Air's fleet age averages six years making it one of the youngest in the industry.

The 27 twin-engine MD-80s and three MD-90s are midrange jets, making them ideal for short hauls, like the Las Vegas-Reno run and intra-California flights, as well as longer routes, like Reno to Chicago.

The upgraded MD-90s have longer range and quieter engines than the MD-80s. Reding said it is one of the most quiet jets in the air and conforms to tough noise restrictions at Orange County's John Wayne Airport.

Reno Air serves destinations as far away as Detroit and Fairbanks, Alaska, and as close as Los Angeles.

Although the company doesn't figure to put a dent in Southwest's and Shuttle by United's domination of the Los Angeles market, it will take an approach Southwest won't touch -- code-share agreements with international carriers. Reno Air already has an agreement with Hawaiian Airlines to offer seamless travel to visitors flying over the Pacific Ocean to Los Angeles. A few more similar agreements should make the Pacific Rim market lucrative for Reno Air.

"If a 747 comes up from Tokyo and spits out 50 passengers that want to fly to Vegas, I don't think it's crazy," said aviation analyst Boyd.

For the payoff, Reno Air must succeed where Las Vegas-based TriStar failed. TriStar attempted to develop similar code-sharing arrangements to bring Asian visitors to Las Vegas and the Grand Canyon but could never sign a deal. TriStar no longer flies scheduled routes.

In addition to code-sharing for overseas travelers, Reno Air has linked with American Airlines to offer a frequent-flier package that is as generous as any in the country. Through the AAdvantage program, Reno Air fliers receive credit toward free American Airlines travel with every flight. A free flight is available after 25,000 miles.

But those same miles can be accrued toward free travel on Reno Air flights. Free flights are available after 15,000 miles.

"We've found a lot of people taking advantage of it to fly to Alaska on vacation," said Sarner.

With all the amenities in place and major growth in the Las Vegas market soon to occur, what's ahead for Reno Air?

Like most airline executives, Reding won't tip his hand as to where the company will next attempt to expand.

One analyst suggested drawing a line south from Detroit; everything west of the line is a possibility.

One quirk in the Reno Air route structure is a tiny chunk of the Southeast served by the company's Gulf Coast Flyer. It's scheduled air service between Biloxi, Miss., and Atlanta, Orlando and Tampa, Fla.

Reding said the route started as a charter operation to bring gamblers to the Mississippi coastal casinos, but has been transformed into regular service, subsidized by an association of Mississippi resorts. The image of Reno as a gambling destination has sold the Gulf Coast operation.

As more and more people learn about the airline, its popularity increases. Late last week, Zagat, the New Jersey-based organization that rates resorts and travel amenities ranked Reno Air eighth in the nation and 38th worldwide in a survey of 10,000 frequent fliers and 1,400 travel industry professionals. Reno Air came out ahead of Northwest, America West, Southwest, TWA and Continental in the survey.

"It's a real compliment to Reno Air," said Annie Turner, the company's manager of public relations. "It shows that many people still prefer amenities to a no-frills operation."

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