Graham Warwick/WASHINGTON DC

Two Las Vegas casinos have together invested $30 million in low-fares start-up National Airlines, in a bid to offset a decline in seat availability as major airlines redeploy aircraft to higher-yield routes.

National plans to start services in January or February 1999, operating four leased Boeing 757s on non-stop flights linking Las Vegas with New York, Miami, Los Angeles and San Francisco. The carrier, headed by former America West Airlines chief executive Michael Conway, plans to grow its fleet to almost 40 757s within five years.

Harrah's Entertainment and Rio Hotel &Casino have each invested $15 million in National, while Wexford Management has put up $7 million to become a regional-airline partner. Wexford owns a regional airline and has Embraer RJ-135 regional jets on order.

National says it now has over $50 million in start-up capital, "...twice as much as any previous start-up." The company also believes it has a good business plan. Traffic at Las Vegas' McCarran Airport declined by 0.5% in 1997 and is down 1.9% already this year as major airlines have redeployed aircraft from the leisure-dominated Las Vegas market to higher-yield routes, reducing seat availability. Fares have also risen.

At the same time, casinos have committed to adding 21,000 new hotel rooms in Las Vegas by the year 2000, generating demand for an additional 11,000 daily airline seats. National says it plans initially to operate 11 daily roundtrips with its 172-seat two-class 757s, or about 10% of that needed to fill the additional hotel rooms.

As the airports to be served from Las Vegas are all international gateways, National aims to negotiate interline agreements with overseas carriers. The airline will also have marketing alliances with its casino backers to include linking of frequent-flier and frequent-gambler programmes, as well as room and ticket reservation systems.

Source: Flight International