National shutdown would hurt casinos, at least in short-term

David Strow

Friday, June 1, 2001 | 11:23 a.m.

If National Airlines is forced to shut down, McCarran International Airport would lose its No. 5 air carrier overnight.

No one believes that could be anything but bad news for the Las Vegas Strip, which is already facing Wall Street concerns over a slowdown. Yet there's also confidence among some that other airlines would be quick to pick up the slack.

"It's obviously a negative for the market, especially because of the softened California market," said David Anders, gaming analyst for Merrill Lynch. "The long-haul visitor is becoming increasingly important to Las Vegas. If you take National's New York, Chicago and D.C. flights out, those are some very profitable customers that won't be there."

National's share of the McCarran pie has been growing. Over the first three months of the year, the airline handled 519,000 passengers, or 6.2 percent of all scheduled passengers. By May, National's scheduled flights and seats were up 27 percent over last year.

"When your primary source of business is the fly-in customer, and you lose a major airline, that is a significant negative to the town," said Andrew Zarnett, gaming analyst with Deutsche Banc Alex. Brown. Zarnett estimated a National closure could reduce visitation by 1 to 2 percent, with the impact being felt primarily by middle-end properties. Anders estimates the impact could be as high as 3 percent, but believes the ultimate number will be lower because other airlines will simply run fuller flights.

"Guys like the Bellagio and Mirage don't get hurt, and guys like the Excalibur and Circus Circus don't get hurt because their customers primarily drive in," Zarnett said. "The mid-market properties would experience pain from this closure on a mid-term basis."

As long as demand for Las Vegas continues, there's confidence other carriers will eventually step up.

"No one wants to see air service to Las Vegas reduced in any way," said Alan Feldman, spokesman for MGM MIRAGE, the largest operator of casinos along the Strip. "At the same time, there can be no confusion about demand in Las Vegas, and I have to believe not only will the existing carriers take a look at that, but that there may be other (airlines) that may look at expanding routes.

"The demand has been shown. Someone will do it."