TWA, AA merger called likely

Monday, Jan. 8, 2001 | 11:28 a.m.

The proposed acquisition of TWA by American Airlines shouldn't have an immediate effect on Las Vegas passenger traffic, local aviation experts say.

But the long-term impacts of consolidation of the airline industry could change traffic patterns to McCarran International Airport dramatically.

Several newspapers reported today that TWA's acquisition by American is imminent, but the company is not confirming the reports.

Because TWA has only five flights a day to Las Vegas -- all to and from St. Louis -- the potential loss of those flights would only mean a drop of 1.2 percent of the seats coming into Las Vegas.

But local air service experts expect American would keep the St. Louis routes intact since TWA holds a virtual monopoly on the route. Southwest Airlines is the only other carrier offering nonstop service between Las Vegas and St. Louis, and it has only one flight a week on Saturdays.

But Las Vegas' track record with American in the last year has been one of service reduction.

When American acquired Reno Air in 1998, it picked up all of Reno Air's routes, including flights between Las Vegas and Reno. But last year, American ended service to four of the eight markets it served, pulling eight flights a day from its Las Vegas schedule.

Today, American has 24 daily flights in and out of Las Vegas, with eight to Los Angeles, seven to Chicago's O'Hare International Airport, five to San Jose, Calif., and four to Dallas-Fort Worth International Airport. American carried 932,824 passengers in the first 10 months of 2000, ranking fifth among airlines serving McCarran. With the withdrawal of the eight flights earlier this year, National Airlines has surpassed American as the fifth busiest carrier at McCarran.

TWA, meanwhile, ranks 11th in passenger traffic at McCarran, carrying 228,493 passengers in the first 10 months. It has had declining traffic in Las Vegas after discontinuing a daily nonstop flight between Las Vegas and New York's John F. Kennedy International Airport in June.

"Anytime you lose any flight to Las Vegas, we're concerned," said Bill Mahaffey, manager of transportation for the Las Vegas Convention and Visitors Authority. "But TWA is not a major player here in Las Vegas."

Mahaffey said he expects American could develop St. Louis' Lambert Field into a hub facility for the airline, a theory shared by Dennis Casteel of Carlson Wagonlit Summerlin Travel.

"Who knows what would happen if they did that," Casteel said. "It's possible they could de-emphasize their presence in Chicago."

Casteel said a St. Louis hub operation for American could relieve traffic-burdened O'Hare International, which is one of the nation's worst airports for traffic delays, many of them resulting from bad weather.

Mahaffey said American has shown less regard for Las Vegas because its emphasis is on serving business travelers. Airlines make more per seat from business travelers than leisure travelers heading for vacation destinations like Las Vegas.

When American acquired Reno Air, many speculated early that it was to acquire the airline's aircraft to beef up its more lucrative business routes. That doesn't appear to be the case with TWA, even though it has a relatively young fleet with aircraft similar to those operated by American.

Harry Kassap, manager of air service development at McCarran, fears that American could reduce the size of planes flying between St. Louis and Las Vegas, dedicating the larger Boeing 757s and 767s to business routes and flying twin-engine short-range MD-80s and new Boeing 717s here instead.

Mahaffey said an even bigger impact on Las Vegas could occur in the future if the American-TWA move sparks other consolidation within the industry. He said Northwest, Continental, America West and Alaska airlines could be takeover targets of some of the larger air carriers.

The impact of an America West buyout -- the second-largest airline serving Las Vegas -- could be far more dramatic.

"If this bullet is shot, who's to say what (Atlanta-based) Delta (Air Lines) would do to protect their interest," Mahaffey said.

Casteel said Southwest and National could also be winners if American acquires TWA because it could open up opportunities for those airlines if American decontinues any Las Vegas flights.

Another Las Vegas company that could be impacted by the deal is Carl Icahn's Lowestfare.com, an online ticket sales Internet site.

Lowestfare has a series of marketing deals in place with TWA, offering discount air fares and hotel reservations.

Ken Swanton, chief executive officer of Lowestfare.com, had no comment this morning on the proposed American-TWA deal.