Airline Merger Effect on Las Vegas

The United Continental merger seems like it will initially have no effect on the Las Vegas airport. United is the 2nd airline at Vegas and now will go over a million passengers a year. Continental flew to Houston Intercontinental Airport, Newark Airport, and Cleveland (none of which United flies to).

It is probable that Cleveland may be de-emphasized as a hub since it is about 300 miles from Dulles and O'Hare and it has no international flights to Europe. But that decision will have almost no effect on Vegas since the three times daily flights to Cleveland would probably be partially replaced by Southwest.

In general Southwest is so dominant at Vegas, (it is larger than American, Delta-Northwest, US Airways, United- Continental combined) that these airlines usually only fly to Vegas if there are possible connections to an International flight.

I just don't see Vegas recovering it's lost flights anytime soon. The increase of international flights (especially to the UK) can't offset the domestic loss.

In a town built upon the Toke system, I wonder if the casinos ever toke the airlines?

Allegiant seems closer to the casinos than the other airlines. Their business model is only to fly to very small airports, and there are no connections. Essentially they feed to vacation hubs like Vegas, Orlando, Myrtle Beach, etc.

They also restrict flights to a maximum of about 1500 miles. Generally people don't like to pay much more for flights over 2000 miles, but costs are higher.

Quote: FleaStiff

In a town built upon the Toke system, I wonder if the casinos ever toke the airlines?

Not that I know of. But it's a popular urban legend. Allegedly flights to vegas a re cheaper than flights to anywhere else, because the casinos pay the airlines a subsidy. To my knowledge this is just a myth.

When you book a hotel-airfare combination on an airline's website (Air Canada Vacations, Southwest Vacations), the casinos charge less than their book rate to the airline. Airlines in turn will mark up the hotel rate marginally to be somewhere between what the hotel charges them to book the room and the hotel's own posted rate... the hotel must have an agreement with the carrier for the airline to pull this off.

Southwest I believe is the only airline that will slightly reduce the airfare component of its vacation booking when you book a package with them. That is why you can only buy airfares and hotels on Southwest and nowhere else.

Casinos would have no reason to subsidize the airlines coming to Vegas unless it was receiving a direct benefit from doing so.

Quote: boymimbo

When you book a hotel-airfare combination on an airline's website (Air Canada Vacations, Southwest Vacations), the casinos charge less than their book rate to the airline. Airlines in turn will mark up the hotel rate marginally to be somewhere between what the hotel charges them to book the room and the hotel's own posted rate... the hotel must have an agreement with the carrier for the airline to pull this off.

Sure. But hotels do that with travel agents and tour operators and even with large groups. It's wholesale pricing. Besides, hotels do this in every popular destination, be it for business or pleasure. You'll find such deals for trips to NYC, Cancun, Orlando, etc.

Quote: boymimbo

Casinos would have no reason to subsidize the airlines coming to Vegas unless it was receiving a direct benefit from doing so.

Certainly. In this case airlines fly to Vegas because lots of people wnat to fly there. Same as why they fly to LA. Perhaps a few more people would fly in if the fligths were, say, 10% cheaper overall, but I doubt the additional numbers would justify the expense for the casinos.

Half the domestic flights are on Southwest, Allegiant, and Jet Blue.

Basically, the legacy carriers only fly to Vegas to provide connections to their hubs. In some very rare cases there is no competition with Southwest, and they fly more than 3 planes per day to these hubs.

You have a few areas where Southwest doesn't fly to:
Dallas-Ft-Worth ( which will change once Southwest can fly from Love field non-stop to Las Vegas)
Houston Intercontinental (Southwest flies to Houston Hobby)
Newark International (Southwest doesn't fly to New Jersey)
Atlanta (Southwest doesn't fly to Georgia)

United, is McCarran's No. 2 air carrier and they have five hubs. Daily they fly
6-7 flights to Denver,
6-7 flights to Chicago's O'Hare,
4 flights to San Francisco,
3-4 flights to LAX and
3 flights to Dulles in Washington D.C.



I think flight costs are low because the Southwest keeps them low, and it is Southwest's biggest airport.

Newark Liberty is as much a NYC airport as it is a New Jersey airport. It's actually closer to Manhattan than either JFK or La Guardia. Southwest does serve LGA, though they cannot fly non-stop to Las Vegas. Additionally, Southwest does serve Philadelphia, and that's as close (if not closer) to a good portion of New Jersey as Newark Liberty.

I suppose what I was trying to say that despite Las Vegas airport being the 7th largest in the USA, and 17th largest in the world it has a fairly simple structure. The legacy airlines don't really compete with each other, they simply fly to their hubs. Generally they have some percentage of people switch to international flights at their hubs. No US carrier flies internationally from Las Vegas. Mergers have little effect since there is no overlap.

Southwest dominates the airport. The legacy carriers only have a real shot domestically if they are not competing directly with Southwest.

The foreign carriers have good service to Canada, and reasonable service to Mexico. The UK seems to be a growing market. Nonstops to Asia consist of twice a week to Seoul and to Manila Philippines via Vancouver.
There are no non-stops to China, Japan, Taiwan, France or Germany.

Similar size airports in the USA: Houston, and San Francisco have huge numbers of international destinations.

Vegas has been bumped off the 20 largest International Gateways by Charlotte, NC. The American Southeast is expanding it's international traffic, while Vegas is not keeping pace.

2008 International Passengers

Gateway airport	2008
New York (JFK), NY	22,029
Los Angeles, CA	16,164
Miami, FL	15,999
Chicago (O Hare), IL	11,106
Newark, NJ	10,934
Atlanta, GA	9,232
San Francisco, CA	8,331
Houston (G. Bush), TX	7,673
Washington (Dulles), DC	6,011
Dallas-Ft. Worth, TX	4,938
Detroit, MI	3,800
Philadelphia, PA	3,724
Boston, MA	3,523
Honolulu, HI	3,414
Fort Lauderdale, FL	3,073
Seattle-Tacoma, WA	2,787
Orlando, FL	2,575
Guam Island, GU	2,564
Minneapolis-St. Paul, MN	2,560
Charlotte, NC	2,297

Well, you'd have to say that the reason US airlines don't fly non-stop from Las Vegas to international destinations is because there just isn't as much money to be made. Airlines flying internationally from the US make their money on selling business-class seats at list price. There just aren't enough people willing to buy those same seats flying to and from Las Vegas. This may sound counter-intuitive, but it's the answer.

Re Airfares to Las Vegas:

Has anyone else noticed a sharp increase in the airfares to LV
compared to last year ?

Even on Southwest, I am seeing about a 50 % increase in roundtrip
airfare, from CLE to LAS, July 2010 vs July 2009.

Yes, I know fuel prices have increased and many airlines are
struggling financially.

But I think these higher air fares will have a negative effect
on the # of passengers coming out, especially as more and more
states add casinos ( for example, Ohio next year ), and as the
quality of the mid-west casinos/hotels get nicer and nicer
( for example, Belterra south of Cincinnati ).

So if the Conti/United merger reduces competition and raises
prices, then logically it will eventually, if not initally,
effect the Las Vegas airport.

...just my observations on this.

I would think that MGM MIRAGE would want to buy 20 business class seats per day to bring some whales to the Bellagio. Especially since they don't have a big Asian presence. You would think that would be enough for some airline (possibly foreign) to fly a plane here daily from Hong Kong or Beijing.

Quote: JohnnyQ

So if the Conti/United merger reduces competition and raises prices, then logically it will eventually, if not initally, effect the Las Vegas airport.

...just my observations on this.

Actually Johnny, you are from the one city that is most likely to be affected by the merger.

The merged airline will have 9 hubs in CONUS, and Cleveland is the smallest.

Cleveland is too close to the United Hubs of Washington Dulles and Chicago O'Hare. Since it has no European flights it is likely to be reduced significantly. If the merged airline stops flying to Cleveland / Las Vegas then even Southwest will raise their fares.

But that is more of a Cleveland issue than a Las Vegas issue. I'm sorry for you. It's tough to lose a hub. You suddenly find your options reduced considerably.

I hate to mention this because what good does it do but my flight from CMH (Columbus) to LAS was $120 all in on US Airways with a connection in Phoenix. If you want a low fare, you have to be VERY flexible with times and airports. (I don't live in Columbus but it is drivable for me).

I see that XL Airways is going to introduce non-stops to Las Vegas from Paris. Parisians broke out in tears at the thought of the effect on the culture of easy access to Las Vegas.

There are two kinds of airports that handle lots of international flights: hubs and major cities. The two usually coincide, think NYC, Chicago, London, Los Angeles, etc.

A third type is the major tourist destination. You'll see plenty of itnernational flights, but mostly from foreign carriers. This is the case in Vegas, but also in Cancun and other tourist spots. This is especially true when the tourist trap doesn't even draw travelers from a surrounding market.

European airlines face a longer trip all the way to Vegas. Of course they fly even farther, to LAX and SFO, but I suppose the passenger volume to Vegas alone doesn't justify direct flights. So they probably steer customers to their US partners through One World and Star Alliance.

Vegas needs a flight from London, Paris, Frankfurt, Tokyo, Beijing and Hong Kong. They could all be off price airlines, but it has to be easier to get here for international passengers.

I realize that every major city has a non-stop to LAX, but that makes the trip to LAS longer.

Quote: pacomartin

I realize that every major city has a non-stop to LAX, but that makes the trip to LAS longer.

If I were traveling from Europe to Vegas, I'd take a stop at either NYC, Chicago, Atlanta or Houston, and from there to LAS.

Coming from Asia LAX is good enough, but there other options like Vancouver and Seattle/Tacoma.

We usually fly to LV from CLE because of the Non-Stop flights on Conti or Southwest. But I also always check fares from Canton-Akron, a little regional airport that is growing (Airtran had direct flights to LV from CAK a few years ago, but they no longer do). If I found a great fare, I would also consider driving to CMH Columbus, although I haven't done that yet.

Anyway, I've booked my airfares and now can try and figure out how to use as many good hotel deals as I can find AND work in a stay on the North Rim of the Grand Canyon.

If you are willing to drive to Columbus, there is a small regional airport called Youngstown Ohio (YNG) that is about 70 miles from you. www.AllegiantAir.com already has an operation there that flies to Florida.

Check their website before your next trip since they may add flights to Vegas since they are a Vegas company.

They also fly into Toledo which is further for you, but the same problem. Right now they only go to Florida.

Virgin flies from London. The problem is that no airlines have a hub in Vegas the major airlines are connected via alliances that only allows them to fly into their hubs. For example, if JAL was going to have a daily flight from Tokyo to Las Vegas, then other airlines would also have to be allowed to fly from Vegas to Tokyo. If no US airlines elect to do so, then JAL cannot operate the route either. There are not enough passengers to fill the planes.

Quote: boymimbo

Virgin flies from London. The problem is that no airlines have a hub in Vegas the major airlines are connected via alliances that only allows them to fly into their hubs. For example, if JAL was going to have a daily flight from Tokyo to Las Vegas, then other airlines would also have to be allowed to fly from Vegas to Tokyo. If no US airlines elect to do so, then JAL cannot operate the route either. There are not enough passengers to fill the planes.

Ultimately Southwest will have to find a foreign partner to connect flights with. Virgin Atlantic currently teams with Continental, but once the merger is completed it may find it awkward to be teamed with it's rival United Air,

Unfortunately Southwest only flies to 6 of the 11 airports that Virgin Atlantic currently flies to, so it is an unlikely match.

London Gatwick (LGW) - Las Vegas (LAS) Southwest largest airport
London Heathrow (LHR) - Boston (BOS) Southwest
London Heathrow (LHR) - Los Angeles (LAX) Southwest
London Gatwick (LGW) - Orlando (MCO) Southwest
Manchester (MAN) - Orlando (MCO) Southwest
London Heathrow (LHR) - San Francisco (SFO) Southwest
London Heathrow (LHR) - Washington DC (IAD) Southwest

-------
London Heathrow (LHR) - Miami (MIA) Southwest goes to Fort Lauderdale
London Heathrow (LHR) - Chicago (ORD) Southwest goes to Midway
London Heathrow (LHR) - New York Newark (EWR) Soutwest does not fly here
London Heathrow (LHR) - New York (JFK) Southwest does not fly here
London Gatwick (LGW) - Nassau, Bahamas (NAS) Southwest does not fly here

I think Southwest is quite happy with its own little network. It had an agreement up here in Canada with WestJet but it didn't get off the ground. Southwest flies 737s exclusively so it wouldn't see any benefit to flying internationally without having to by another class of planes, which would add a great deal of cost.