Will Hobby Become an International Airport?
United and Southwest are squabbling over whether Houston Hobby should become an international airport. Which airline will prevail?
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Southwest would LUV to turn Houston Hobby into an international airport, but United Airlines is none to pleased about the proposal.
On Monday, Mario Diaz, director of the Houston Airport System, threw his weight behind the idea at a press conference, saying it would benefit consumers, the Houston Chronicle‘s Kiah Collier and Chris Moran reported. “New international air service at Hobby will create competition in the Houston Latin American market, leading to lower fares and more travel options for Houston passengers,” Diaz said.
The change would create 10,000 jobs and draw an additional 1.5 million travelers and $1.6 billion to Houston, according to two consultants retained by the city. That study also said that one-way fares to Latin America would drop an average of $223 a ticket, with fares to Bogota projected to drop from $739 to $133 and fares to Cancun expected to dip from $207 to $108.
Last week, former Continental CEO Gordon Bethune told the Houston Chronicle‘s editorial board he doubted the consultants’ predictions, saying “I think their study says they’re going to Bogota for $130. Somebody’s smoking crack.”
United wants to keep all international flights at George Bush Intercontinental Airport, one of the airline’s major hubs, the Chronicle reported. (Longer-haul international flights would remain at IAH.) United maintains that the proposal, if it advances, imperils the construction of its new $1 billion terminal at IAH and would force the Chicago-based carrier to shed 1,300 jobs.
The Houston City Council and Mayor Annise Parker are expected to decide later this month. If the proposal goes forward, Southwest has promised to shoulder the cost (estimated at $75 million to $100 million) of equipping the airport for international travel.
Southwest launched a website, www.freehobbyairport.com, this week to help Houston residents contact city council members on the airlines behalf.
“The downside? There isn’t one — unless you’re Chicago-based United-Continental Airlines and want to maintain a stranglehold on the international air service from Houston, especially to Mexico, the Caribbean and cities in Central and South America. United-Continental is pulling out all the stops to put a stop to fair competition,” the site says. “We fully believe in keeping competition alive and fares low. It’s time to open up the skies. It’s time to free Hobby.”
Executives from both airlines met with the Chronicle‘s editorial board to make their pitches and Moran recapped both meetings in a blog post. On April 5, the editorial board weighed in with a lengthy editorial on the matter. Before showing their hand, they noted that both airlines have deep roots in Houston:
Both of these airlines have their places in the hearts of thousands of Houstonians, and for good reason. Before its name change and decision to move its headquarters to Chicago, United, or at least a large chunk of it, was Continental Airlines, with headquarters here. For years it billed itself as Houston’s hometown airline, a title that it has only recently forfeited. It continues to employ some 17,000 Houstonians. As one of Houston’s largest private employers, it has been a job-creating engine and an exemplary corporate citizen.
Southwest has a distinctive Houston stamp, too. The airline has served our city for all of its 41 years of operation. And Houston was one of three cities depicted on the famous cocktail napkin on which founders Herb Kelleher and Rollin King drew up the original business plan in San Antonio’s St. Anthony Club all those years ago. Dallas and San Antonio were the other two.
But, ultimately, the board leaned in favor of accepting Southwest’s proposal:
As a general proposition, we believe the skies over Houston are big enough for both of these airlines to grow and prosper. And we believe that the future of this city and region is even bigger than the wild blue yonder they both call home.
That inclines us to favor welcoming Southwest’s entrepreneurial plan to expand Hobby at its own expense.
We like that spirit. If it sounds familiar, it is: It’s the same spirit that built this city. Competition and growth have always been Houston’s life’s blood. And competition almost always benefits the consumer.
Before throwing their complete weight behind the proposal, the board wants some lingering questions answered:
1) Will greenlighting Southwest for expansion at Hobby in any way harm IAH, where United/Continental and the taxpayers have made large good-faith investments in improvements?
2) Which cities fare better in terms of service and economic benefit – those that allow two airports to handle international traffic or those that restrict that traffic to one airport?
3) Will the additional customs agents necessary for international flights from Hobby be available without affecting the much larger customs process at IAH?
4) Are Southwest’s jobs and economic impact figures accurate or overstated?
5) Is this a true growth proposition? Or are United’s arguments about “cannibalization” of its business accurate?
6) Is United’s opposition to Southwest merely bluff and bluster?