Northwest may expand to daily Tokyo-LV service

Wednesday, April 7, 1999 | 10:42 a.m.

The next six months will be critical to Northwest Airlines if it is to follow through on plans to turn its twice-a-week flights from Tokyo to Las Vegas into daily service next year.

Jun Mokudai, vice president of Northwest Airlines' Japan operation, said Tuesday that Northwest is anxious to turn its Thursday and Monday nonstop flights into daily trips and several factors are encouraging the Minneapolis-based airline.

Northwest initiated the route in June and has been joined by a competitor that has grown faster than it has. Japan Airlines began flying the route twice a week in October and added a third flight a month later. It adds a fourth flight this month.

Northwest's Tokyo flights are unique in that they are nonstop in both directions. The three weekly JAL flights are nonstop from Tokyo, but stop in Los Angeles on their return.

Mokudai told travel professionals gathered at the Active America Travel Summit '99 in Las Vegas that its Tokyo-Las Vegas flights are operating at about 80 percent of capacity. That's a favorable load factor by airline standards.

The Northwest executive said the airline has observed other things that are encouraging the company about its Las Vegas prospects:

The Asian recession has started to bottom out. Mokudai said Japanese economists believe the worst of the region's economic woes are over. That's good for Northwest, Japan's largest foreign carrier, which operates a hub at Tokyo's Narita Airport linking the city to 10 other Asian destinations.

The company has observed growth in a key retail center. Mokudai said Tokyo's famed Ginza district has experienced growth in sales and there are new stores joining the world-famous strip of tony shops. To Northwest, that means there is renewed confidence by consumers having more disposable income to shop -- and to travel.

The yen-to-dollar exchange has shifted back to a level that is more favorable to Japanese tourists. Last summer, the exchange rate reached 150 yen to the dollar, a level that favored U.S. tourists in Japan. Now, the rate is closer to 120 yen to the dollar, giving Japanese tourists more buying power in the United States.

Mokudai cautioned that Northwest hasn't made a final decision on adding flights to Las Vegas, but noted it is very interested in the market. The second and third quarters will be critical in the decision-making process. If demand remains high, Mokudai said Northwest could add flights sometime next year.

Northwest is adding four Boeing 747 jets to its fleet this year, but Mokudai said those planes will be committed to service between Tokyo and New York. He also said Northwest isn't prepared to offer nonstop service to Las Vegas from two other Japanese cities, Osaka and Nagoya, until 2005 at the earliest.

Northwest isn't likely to add any new destinations from Las Vegas on its domestic routes anytime soon.

Christopher Clouser, senior vice president of human resources, communications and administration for Northwest, said the airline is committed to its hub-and-spoke operation, which means nearly all of its flights take passengers to hub airports where they change planes to go to their ultimate destination.

Clouser said the airline could add frequency of its Las Vegas flights to established hubs, but won't add any new destinations. Northwest's domestic hubs are in Minneapolis, Detroit and Memphis, Tenn. From Las Vegas, Northwest offers direct flights to those cities, Los Angeles and Tokyo.

But a new global alliance Northwest plans to be a part of could result in more international traffic for Las Vegas from Europe and South America.

Clouser explained that Northwest is in the process of getting regulatory approvals on an alliance that would include his airline, Continental Airlines, KLM and Alitalia Airlines of Italy. Northwest already has partnerships with KLM and Continental, but the new agreement would develop even more connecting flights between all the partners.

"Alliance agreements increase our opportunities," Clouser told about 70 travel professionals attending the event at the Four Seasons Hotel. "Our strategic alliance with KLM and Continental protects Northwest from the Asian flu."

KLM flies between Europe and the United States while Continental is strong in Central and South America.

"This new alliance, which will be announced in August, will allow us to compete with American, United and Delta," Clouser said. "It's no longer the Big Three (airlines). It's the Big Four."

Clouser also thanked the travel agents in attendance for bearing with Northwest during its 13-day pilots strike last year. He said labor relations are stronger than ever as a result of the negotiations between Northwest and the Air Line Pilots Association.