Some airlines serving LV reject hike in air fares

Monday, March 20, 2000 | 11:26 a.m.

The preponderance of discount air carriers flying to McCarran International Airport has kept fares to Las Vegas in check for now -- but airlines may be making money here in a different way that's harder to track.

Airlines serving Las Vegas have held the line on fare increases that affected many other markets nationwide. Most of the major air carriers increased ticket prices as much as $40 per round trip for business travelers and $20 for leisure travelers who book tickets in advance.

Minneapolis-based Northwest Airlines announced higher fares Thursday and by Friday, American Airlines, Continental Airlines, Delta Air Lines, United Airlines, Trans World Airlines and America West Airlines had boosted their fares.

Air carriers looking to increase fares usually test the waters on their own and if they're matched by competitors, the new rates stick.

But Las Vegas is dominated by Southwest Airlines, the Dallas-based discount carrier that often doesn't follow prices established by the rest of the pack. Las Vegas-based National Airlines also is building a reputation as a low-cost carrier in its short history.

Dennis Casteel, operations manager at Carlson-Wagonlit Summerlin Travel, said most of the fares to and from Las Vegas late last week are still in effect today.

"Our market tends to stay a little more stable because of the number of discounters who operate here and because we're a leisure market," Casteel said.

On example of how Southwest's presence in the local market can affect ticket pricing occurred on fares to Reno. American Airlines raised the fare from $99 to $109 round trip, plus taxes and passenger facility charges, but Southwest has kept it at $99.

"I would expect American to pull that back once they see Southwest is keeping theirs the same," Casteel said.

A round-trip fare to New York on National Airlines has stayed at $319 round trip and trips to Miami on National have stayed at $288 per round trip, Casteel said.

To Los Angeles, one of the most popular routes to and from Las Vegas, the fare on United, America West, Southwest, National and Delta has stayed at $91 round trip. The Phoenix market, dominated by Southwest and America West, has stayed at $99.

On flights to and from Denver, discount carrier Frontier Airlines lowered its price from last week. Frontier now is offering round-trip tickets for $194. United, the dominant carrier between Las Vegas and Denver, has stuck at $286.

But Casteel said airlines may still be making more money on Las Vegas routes in a way that isn't easy to detect and track. Airlines increase their market yields to Las Vegas by offering fewer seats at the advertised lowest fare. Airlines keep those numbers proprietary and change them as market conditions change, Casteel said.

"It's almost impossible to track and it changes from day to day," Casteel said. "The airlines watch the booking patterns and they'll offer more seats (at a lower rate) if a flight isn't filling up. If it books early, they'll cut down the number of seats they offer (at the lower rate)."

Bob Harrell of Harrell Associates, a New York travel consulting firm that specializes in airline pricing trends and George Wozniak, president of Hobbit Travel in Minneapolis, agreed that the air-fare seesaw isn't likely to end. Airlines tend to have fare sales about every six weeks, Harrell said.

"There's this Pavlovian response (among consumers) that I'll just wait until the next fare sale when I know what I'm going to do. The airlines have to respond to the consumer," Harrell said.

"Somebody is going to start another fare war before Easter," Wozniak predicted. "I'd wait until the end of April before buying my tickets for summer travel."

The newest round of fare increases comes on top of a $20 round-trip fuel surcharge instituted earlier this year as airlines continue to struggle with jet fuel prices that have soared in the last year.

Although Northwest did not specifically link its new increase to fuel prices, fuel is Northwest's second-largest expense, after salaries. Northwest spokesman Jon Austin said jet fuel is 20 to 30 cents a gallon higher than a year ago, and each penny of increase costs the airline $20 million a year.

Northwest's fare increases also included varying hikes in unpublished senior, military and Internet fares. Northwest also raised its fees for excess luggage, transporting pets, replacing lost tickets and other services by $5 to $25.

The Associated Press contributed to this report.