United’s strategy for Vegas unclear as merger approaches

By Richard N. Velotta

Friday, Sept. 10, 2010 | 3 a.m.

The proposed merger of United Airlines and Continental Airlines — both with a moderate presence at McCarran International Airport — appears to be on track. Buy that does it mean for Las Vegas?

If approved by the end of November as planned, the merger would be the second major airline consolidation of the year. Northwest and Delta Air Lines completed their merger at the end of January.

The new United would be bigger than the new Delta, and United would capitalize most on Continental’s network of flights to Latin America. Continental routes also would beef up United’s presence in Europe.

Although the Northwest-Delta merger didn’t hurt Las Vegas — in fact, it may have helped — the United-Continental union is a little fuzzier, and a lot will depend on the new United’s hub strategy.

Although not a done deal, the merger appears to be progressing.

The Justice Department, which reviews mergers for potential antitrust violations, gave its blessing last month. But a class action lawsuit by consumers concerned that the merger would create a monopoly, increase fares and cost jobs is in play.

Bloomberg reported that attorney Joseph Alioto, who is representing consumers, tried to get information from Continental and United executives about the hub strategy.

United’s hubs are in San Francisco, Denver, Chicago and Washington, while Continental’s biggest operations are at Houston Intercontinental Airport, Cleveland and Newark, N.J.’s Liberty International Airport.

Many analysts have questioned whether the new United would downsize or eliminate Cleveland operations since Chicago, United’s headquarters, is so close.

Bloomberg reported that Alioto and U.S. District Judge Richard Seeborg asked Continental CEO Jeff Smisek to explain “hub stat” documents detailing information for Denver, San Francisco, Cleveland, Newark and other cities — all except one showing a planned decrease in departures. Smisek said they were prepared by Continental’s “network group,” whose members “put together their best guess given the limited information we have.”

The documents were used “to get an idea of what the combined network would look like” to evaluate the merger, Smisek said. The data from the documents are “insufficient” to make concrete decisions because they rely on projections and not actual information from United, Smisek said.

“I hope we will keep all our hubs open, but I can’t guarantee that,” he said in court. “I don’t know what we’ll do because we haven’t done the optimization.”

Clark County Aviation Director Randall Walker isn’t too worried about what the merger will mean at McCarran.

“I don’t see any real impact here,” Walker said recently. “The (United and Continental) systems don’t have a lot of overlap. The real question will be what’s going to happen with Cleveland. But I don’t anticipate anything significant.”

Over the years, Continental and United have rarely adjusted their Las Vegas flights. In July 2005, United and United Express had 39 daily flights; Continental had 15. Five years later, United had 34 and Continental 16.

Today, United has seven round trips a day between McCarran and Denver; six to and from San Francisco; six to and from Chicago’s O’Hare International Airport; four to Los Angeles and three to and from Washington’s Dulles International Airport. In each market, United has competition on the route and it’s not from Continental.

Continental’s Las Vegas presence is smaller.

Today, it offers around seven flights a day to and from Houston Intercontinental; six to and from Newark; and three to and from Cleveland. The big difference is that the Houston and Newark routes aren’t served by other airlines. Southwest uses Houston’s secondary airport, Hobby International.

As part of the Justice Department’s approval, it recommended that Continental divest itself of some of its takeoff and landing slots at Newark so that the merged carrier wouldn’t have too large a presence at Liberty International.

Continental unloaded 36 slots to Southwest Airlines, enough to offer 18 round trips a day. Although the move cleared Continental of any antitrust problems, it also provided an entry to Southwest to supplement its New York City service. Southwest will have a few flights to Long Island’s MacArthur Airport in Islip, New York’s LaGuardia International Airport and Newark.

The question becomes how will the new United and Southwest serve Las Vegas from Newark?

Many of Continental’s six daily flights to Newark are filled with passengers connecting to overseas flights to Europe. Most of United’s connections to Europe are through Washington. Southwest is expected to announce its Newark destinations and schedules in a few weeks since service is planned at Liberty International beginning in March.

Another question is whether United will expand in Las Vegas. In July 2005, Delta had 21 daily flights and Northwest had 15. Today, the new Delta has 45 round trips a day in and out of McCarran. Most connect Las Vegas with hub airports in Atlanta, Detroit, Minneapolis, New York’s John F. Kennedy International and Salt Lake City.

Would United replicate Delta’s strategy?

One interesting aspect of United’s presence in Las Vegas is that it has been locked in to 39 flights a day, and it has been about that number for years. The reason: Union contracts include a requirement to increase personnel and/or pay if United ever hits 40 daily flights. As a result, United has kept its schedule at 39 flights or fewer.

Since United and Continental operate 50 flights a day in Las Vegas, would there be new contracts? Would the new United keep its schedule at 39? Those are questions that won’t likely be answered until the merger is complete.

Walker hasn’t been apprised of any postmerger flight plans, but McCarran is prepared for whatever happens, he said.

Both Continental and United use D gates. Because McCarran is equipped with common-use gate display technology, it’s a simple matter to turn what is now a Continental gate into a United gate.

Walker said he has a plan for merging the ticket counter in the main terminal.

“Most of the merger work at the airport is done in the back of the house,” he said. “So when this happens, we’ll be ready.”

New La Quinta

A three-story La Quinta Inn & Suites has opened near McCarran.

The property at 6560 Surrey St., near Sunset Road and Eastern Avenue, includes 140 rooms and 35 suites, meeting space for 155 people and on-site business and fitness centers.

La Quinta separates itself from many nongaming business hotels by offering free high-speed Internet access and complimentary breakfasts.

It’s Southern Nevada’s sixth La Quinta.

Two-for-one deal

The new bridge at Hoover Dam may help jump-start a new tour package that’s being offered by Papillon Airways, a division of air-tour powerhouse Scenic Airlines.

Papillon’s Hoover Dam helicopter tour includes a low-level flight over the dam and the soon-to-open Mike O’Callaghan-Pat Tillman Memorial Bridge over the canyon. The tour also includes views of Lake Mead, tributaries of the Colorado River and Black Canyon.

Following the flight, the package includes an interior tour of Hoover Dam and its power plant. The tours depart from either Papillon’s Las Vegas or Boulder City terminals and last about 4 1/2 hours with ground transportation transfers.

Tour prices start at $154, but Papillon is offering a two-for-one deal for residents through Oct. 31.