CEO: National Airlines not a target

Friday, July 5, 2002 | 11:14 a.m.

Is part of America West Airlines' strategy to become Las Vegas' hometown airline and put Las Vegas-based National Airlines out of business?

"Of course not," America West Chief Executive Officer W. Douglas Parker says emphatically.

"That's ridiculous," adds airline analyst Mike Boyd of the Boyd Group, Evergreen, Colo. "It's called competition."

National officials are purposely quiet about the issue, considering any formal accusation against America West would likely wind up in court.

But more than a few eyebrows were raised when America West announced it was entering the Seattle market from Las Vegas a few days after National began serving the route.

The Las Vegas-Seattle market already has some heady competition with Alaska Airlines battling discount leader Southwest Airlines. When National announced it was going in, Alaska removed one of its flights. And then, America West announced it would put three flights into the market with its new pricing strategy that removes many ticket purchase requirements, such as a Saturday night stay.

In America West's press releases, it called itself "Las Vegas' hometown airline," a tag that quickly disappeared on subsequent releases after National complained it had registered the phrase.

"Our strategy is to compete," Parker said. "We'll do what's necessary to the extent that certain competitors fly to places that we don't fly. You may see us add services because we want to be the preferred airline of Las Vegas. It's hard to be that when some of your competitors fly to places we don't fly."

National officials are waiting anxiously to see if America West adds service to Washington, D.C.'s, Dulles International Airport or to Reno from Las Vegas -- two destinations National will add later this year. Parker said America West has no plans to add those markets.

"It's understandable that National would be a little nervous," said Robert Mann of R.W. Mann & Co. Inc., Port Washington, N.Y. "If I'm an airline CEO and someone is taking resources out of my rice bowl, I will always claim it's predatory."

"Predatory pricing" is often the cry of the small competitor against the giant. It occurs when a company reduces its prices below its costs in an effort to steal a competitor's customers.

The theory is a large competitor can flood a market with cheap seats to force a smaller foe to eventually give up and, better yet, bow out of the market. A larger airline has deeper pockets and time on its side.

Mann said companies such as United and American have been accused by smaller airlines of being predatory in some markets. When it was flying, Reno Air often accused American of being predatory on its Reno routes.

"It's an easy claim to make and a hard claim to prove," Mann said. "American and United haven't been convicted of anything at the end of the day."