Charter airplanes

I was looking at the expense account of the British Royal family. I see that out of 9 transoceanic trips (or long transcontinental trips to China or the far east) they put the princes and their entourage on a scheduled flight to go to some central hub (like Hong Kong) and then they charter a plane for them to get around locally (which may be a few thousand miles). The trip costs in these cases are usually less than $100K. However, in two cases Prince Charles chartered a plane directly in London to fly across the ocean, do his tour, and fly home. Those charter planes are over $1 million apiece.

This expense report is indicative of the cost of charter flights in jets capable of crossing the ocean. They are considerably more expensive than charters of a few thousand miles. And the cost of subsidizing first class seats (even for an entourage) is still cheaper than most charter flights.

The more I think about it, the more I think that Singapore is going to drain the Asian high rollers from Vegas. It will be much more cost effective for Sands corporation to get people to Singapore than to get them to Vegas. Since Singapore has a tax rate on par with Nevada there is very little incentive to take them to Vegas instead. The sheer grandeur of that casino means that they won't feel like they are being shortchanged. In many cases it will probably be sufficient to simply buy them first class seats on scheduled aircraft.

Hong Kong is only about 1600 miles from Singapore, and Taipei is roughly 2000 miles. That's close enough for a weekend trip.

Steve Wynn is probably not going to have a casino outside of Macau in the next 6 years, so he still has the tax incentive to bring people to Vegas. It is not clear how much MGM-MIRAGE caters to this market. I don't think that Ceasars has quite the same draw overseas. American high rollers appreciate its history more than Asians.

A scary thought is that the Las Vegas strip gaming revenue was $5.5 billion in 2009. Atlantic City was $5.2 billion in 2006 (the year it peaked). If Vegas loses some significant portion of the billion dollars it made in baccarat revenue to Singapore, you could be looking at almost comparable revenue between the Vegas strip and AC.

Of course, the Vegas strip has a huge non-gaming revenue, while Atlantic City has gives away nearly all of it's non-gaming revenue in comps.

I don't know what air taxi rates are, particularly in Asia where salaries and maintenance costs are low. I don't know if Asian high rollers prefer comped first class tickets or group charters or private charters. I don't know if Asian gamblers have a fixation on Vegas as the ultimate even if Singapore will outdo Vegas in splendor and is closer.

I think there is one thing you may have overlooked: money laundering. Particularly if high rollers are often allied in groups and their agent is linked in any way to the triads, I wonder if that Baccarat money is simply Asian money laundering of some sort?

Now as to comparable revenue between Atlantic City and The Vegas Strip ... why should there be differences?
Why does AC give away its rooms and meals as comps whereas Vegas gives away only about thirty percent of its rooms and meals?

Quote: FleaStiff

I don't know what air taxi rates are, particularly in Asia where salaries and maintenance costs are low. I don't know if Asian high rollers prefer comped first class tickets or group charters or private charters. I don't know if Asian gamblers have a fixation on Vegas as the ultimate even if Singapore will outdo Vegas in splendor and is closer.


I think there is one thing you may have overlooked: money laundering. Particularly if high rollers are often allied in groups and their agent is linked in any way to the triads, I wonder if that Baccarat money is simply Asian money laundering of some sort?

Now as to comparable revenue between Atlantic City and The Vegas Strip ... why should there be differences?
Why does AC give away its rooms and meals as comps whereas Vegas gives away only about thirty percent of its rooms and meals?

I don't know if what all charter rates in Asia are either. My point was that air transport costs should be an order of magnitude less to fly people less than 3000 miles within Asia vs. flying them across the ocean. I also think that given a choice people prefer charters and private air, but from the point of the Casino if there is good and frequent scheduled flights, it is cheaper to pay for tickets.

Air taxis vary a lot as well. In the UK you can rent a small 4 person jet for the day without a bathroom for about US$4K that will take you on a round trip day trip. A 70-100 passenger regional jet can be purchased for under $40million which has enough range to get to Singapore from Hong Kong or Tapei. A jet that can get from Hong Kong to Las Vegas is more like $400million.

The money laundering is a good point. The rate of increase of revenue in Macau is astronomical, far in excess of the biggest jumps in Vegas (roughly 2004 through mid 2007). It makes you wonder if the US companies are investing so much in something that could dry up very quickly as law enforcement improves. I understand that there was so much graft of government funds in China, the federal government responded temporarily by limiting visas to Macau. The US companies took a nasty hit.

The strip has many more tables and slots than AC. The Vegas strip has 83-85K rooms in it's 37 casinos. You often hear that there are 148K room in Vegas, but that is counting the all of Clark county (including Laughlin and Mesquite) downtown, and the rest of the urban area. It is also including hotel and motel rooms that are not attached to casinos. In contrast Atlantic City has 17K hotel rooms and smaller numbers of restaurants and clubs. There are enough day trippers that non-gaming revenue is entirely dedicated to comps (and supporting the bus system where you often get back $33 in free slot play for a $37 ticket). Every single casino in AC spends more in comps than they make in non-gaming revenue. The lone exception is Borgata, which is more of a typical Vegas style resort with expensive restaurants, pricey rooms, clubs, and shows.

Quote: pacomartin

I don't know if what all charter rates in Asia are either. My point was that air transport costs should be an order of magnitude less to fly people less than 3000 miles within Asia vs. flying them across the ocean. I also think that given a choice people prefer charters and private air, but from the point of the Casino if there is good and frequent scheduled flights, it is cheaper to pay for tickets.

The two main expenses for a flight, from the operators point, are fuel and wear. Naturally these are higher on longer flights. On the other hand, a larger number of shorter flights can be as expensive as a single long flight.

As for first class vs charters, it depends on what you mean by a charter. I figure your average whale can afford first class tickets anywhere, and possibly fly that way regularly. They probably can't afford private jet, or a nicely appointed luxury charter (think a plane like Air Force One, with beds, couches, large screen TVs and a bar). Large private planes, like the Tri Star Jet owned by Sands, are more like flying palaces than your usual passenger jet.

If it helps any, about six months ago some people I know wanted to rent a private jet for a round trip from Mexico City to Baja California. They were quoted a figure of US $14,000 for about 12 hours, including the time the plane would spend on the ground.