Loss of jobs, tourists feared

By Liz Benston

Thursday, Aug. 15, 2002 | 11:04 a.m.

The news that the federal government denied National Airlines' bid for a federal loan guarantee doesn't bode well for the Las Vegas economy, which is dependent upon air travel, experts say.

Still, other carriers may quickly fill the gap, should the Las Vegas-based airline fail. And tourists are already finding other ways to avoid the hassle and cost of airline travel, they add.

"National Airlines has been an important part of this market for a long time. We're certainly rooting for them," said Rob Powers, a spokesman for the Las Vegas Convention and Visitors Authority.

But he said: "In a worst-case scenario, we'd hope other airlines would come in and pick up those seats."

"It's difficult to say who would do that. But it's not uncommon for an airline to pick up the slack from discontinued services."

The LVCVA lobbies for increased air service to Las Vegas but doesn't promote particular airlines to tourists.

"It will certainly have an impact on employment in Las Vegas," if the company folds, said Mary Riddel, associate director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.

The loss of local jobs would be a greater blow to the local economy than a possible reduction in tourism numbers should National close, she said.

"This is a very competitive airport. There are so many airlines that fly into Las Vegas, including bargain airlines such as Southwest."

The low prices that lure tourists may become harder to find, however, she said.

"The whole industry has been hit so hard ... I don't know if the airlines can afford fare wars right now."

National employs 1,200 people in Las Vegas and 1,500 overall.

Smaller, regional airlines have generally had more opportunities for survival in the past year because they have leaner operations and can make market adjustments more quickly than the big carriers, said Dean Headley, an associate professor of marketing at Wichita State University and co-author of an annual airline quality survey.

Post-Sept. 11, all airlines are hurting because they haven't been able to attract the same level of customers, even with lowered fares, he said.

"It's all about volume. With the hassle factor that comes with flying now, people are saying, "That's a four-hour (trip). I can drive it in five."

Average daily auto traffic on major highways in Las Vegas was up 11.3 percent in June compared to a year ago, while traffic at the I-15 border with California was up 7.2 percent, a sign that more tourists are choosing road trips over flights, experts say.

Still, overall visitor volume was down 4.4 percent for the month, and total airline passenger traffic was down 5.4 percent.

"It's a total negative for Vegas if nobody fills in those routes," should National fold, said Larry Klatzkin, a gaming industry analyst for Jefferies & Co. "Will Continental respond by adding flights, who knows?"

Resurrection is always a possibility, he added. One option, a Carl Icahn-style takeover, could yield little for the airline but could also mean survival, he said.

National Airlines is known for reasonable prices, which has helped tourism in Las Vegas by keeping fares down, said Anthony Curtis, publisher of the Las Vegas Advisor, a consumer newsletter catering to gamblers and other visitors to Las Vegas.

Airlines that go under can hurt consumers by shrinking the competitive pool, he said. Even if National survives the blow, it may not be able to compete effectively because it's still swimming in red ink, he added.

The airline's local reputation is tops, but it has had greater difficulty building name recognition nationally, he said.

"For people flying to Vegas, I've heard them say that that's the only airline they'll ever fly." Will Continental respond by adding flights, who knows?"