For this answer, we have the latest addition to the LVA family, David McKee, to thank. See below for his bio and check out his blog, "Stiffs & Georges," which you can access from our home page.
Evidently not. As you observe, lack of casino-industry support helped spell National's doom.
It began so promisingly, too. Founder and CEO Michael Conway, a former Continental Airlines and America West executive, launched National with a then-record $50 million in startup capital. (He would later say we should have lined up five times that amount.) Its mission to was to serve the Vegas market. Among Conway’s backers were Harrah’s Entertainment, whose only Strip property at the time was Harrah’s Las Vegas, and the Rio when it was still owned by the Marnell family.
Both companies put $15 million into National’s kitty, as part of a deal that saw each hotel providing ticketing and check-in services. They also checked baggage straight to McCarran International Airport and back ... to the chagrin of the Culinary Union.
National, whose logo was a tricolor "N" superimposed on the map of the United States, took off on May 27, 1999, with an inaugural flight to Los Angeles. Beginning with six daily flights to LAX and Chicago’s Midway Airport, National quickly added San Francisco and New York’s JFK airports to its itinerary, soon followed by Philadelphia, Newark, Miami, Chicago’s O’Hare, and Washington, D.C. Within its first year of service, it went from initially carrying 35,000 passengers a month to 235,000 per month.
At its peak, National was McCarran’s fourth-largest carrier, operating a fleet of 18 757-200s. Despite initial promises of hot meals served on china, National made its dent by undercutting the competition. For instance, it penetrated the Miami market by offering fares 40% lower than those of its rivals. (Some desired markets, like Boston, never fell into National’s grasp, however.)
The Harrah’s/Rio partnership that began with National Airlines swiftly opened the door to Harrah’s absorption of the Rio –- and its National ownership stake. This was more than Harrah’s wanted to take onboard, so it quickly began peddling half of its National ownership.
A February 2000 attempt to get Mirage Resorts to buy in found no takers. It didn’t help that Harrah’s overtures to Steve Wynn came as he was (unsuccessfully) attempting to fend off a takeover bid by Kirk Kerkorian. Not even a shared frequent-flier program with Virgin Atlantic could improve National’s fortunes, which were reeling from the Y2K crisis and a steep rise in fuel costs.
On Dec. 5, 2000, Harrah’s convened a summit meeting of key executives of MGM Mirage, Park Place Entertainment, Boyd Gaming, and Mandalay Resort Group, at which Conway asked each company for $5 million to $7 million apiece. He was rebuffed. MGM Mirage spokesman Alan Feldman explained to the Las Vegas Review-Journal’s Dave Berns that his company didn’t want to irk other airlines, adding, "We’re not here to compete with them."
National filed for bankruptcy the next day. The fact that it was still airborne at all was due to the grace of Harrah’s, which had extended a letter of credit. (In the end, Harrah’s wrote off $45 million in National-related losses.) Carl Icahn kicked the tires of a possible buyout, then withdrew.
The Sept. 11 terrorist attacks were the penultimate nail in the carrier’s coffin, forcing a 20% cutback in flight schedules. When National was forced to offer $1 one-way promotional fares, some Vegas resorts helped out: The Venetian, Rio, Harrah’s Las Vegas, Circus Circus, and Excalibur comped the initial night of a multi-night stay to any guest with a National boarding pass.
But that was as far as it went. Although his company had long since sold its share of National, in December 2001, Harrah’s then-CEO Phil Satre told the Governor’s Conference on Travel & Tourism, "We must support National Airlines."
His plea fell on deaf ears. Mandalay Resort Group Vice President of Marketing John Marz apparently spoke for many when he backhanded a question about investing in National b saying, "We’re not in the airline business, just like we didn’t invest in any airline. We’re in the resort business in Las Vegas, not the airline business."
He got no argument from Conway, who remarked, "To say that other [hotel] companies should have done more is a stretch." (Mandalay was subsequently absorbed by MGM Mirage and Marz left to pursue other opportunities.)
Although it carried over 2 million passengers in 2002, National was really operating on a wing and a prayer – and that prayer was a Hail Mary pass to the Bush administration, in the form of an appeal for a federal loan guarantee. National got the thumbs-down from the feds on Aug. 14, 2002, then limped forward an additional 13 weeks, until the withdrawal of anonymous lender scuttled a last-ditch attempt at refinancing.
Unable to make payroll, National was grounded on Nov. 6, 2002, its last flight leaving Vegas at 4:20 that afternoon. Seventeen other flights out of McCarran were scratched. Passengers were stranded. No refunds were available. Some National employees, upon learning that they were out of work with no severance pay, walked off the job immediately. National’s planes were seized by creditors, and its spare parts were confiscated and sold to Jet X Aerospace. McCarran was left holding the bag for over $7 million in unpaid rent.
There was even a passing whiff of impropriety, as National folded with $1 million-plus in unpaid medical bills, even though one employee alleged medical deductions were being made from his paycheck right to the bitter end.
Given National’s slow dance to the killing ground, is it any wonder that other casino companies haven’t attempted to do what Harrah’s found so costly?
