April 04--Opening Hobby Airport to commercial international flights will create 10,000 jobs, bring 1.6 million more air travelers through Houston annually and inject an additional $1.6 billion a year into the local economy, according to a Southwest Airlines executive who has seen city-commissioned studies on the matter.
"We're asking for an opportunity to invest $100 million in a new building in your city to provide more passengers, 1.6 million a year, a huge economic gain for the city," Ron Ricks, executive vice president and chief legal and regulatory officer for Southwest Airlines, told the Houston Chronicle editorial board Tuesday.
City Council is scheduled next month to consider granting Southwest permission to build a customs facility at Hobby so the low-cost carrier can fly to Cancun, Mexico, the Caribbean and other Latin American destinations as far away as Caracas, Venezuela.
United Airlines, which flies out of Bush Intercontinental Airport, opposes the plan, arguing that it could siphon off international travelers, reducing the mass of connecting traffic on which Bush-based carriers depend to sustain and expand routes from Houston. United also argues that a second international airport will divert Customs officers, creating longer wait times at Bush.
"Southwest is trying to justify the city abandoning the single-international-airport policy that made IAH one of the world's premier gateways. The purported economic benefits are taken directly from the city's draft economic impact study, which we have advised the city is fundamentally flawed," said United spokeswoman Mary Clark in a statement. "Our own conclusions based on realistic assumptions and data show that dividing the city's international air service market will cause dramatic, measurable harm to IAH and Houston's economy."
Customs delays
Houston Airport System Director Mario Diaz is expected to recommend whether Hobby should go global in a report to Mayor Annise Parker on Monday. The recommendation and the city-commissioned studies on the economic impact of the expansion will be made public that same day, the mayor announced in a memo on Tuesday.
Southwest CEO Gary Kelly said repeatedly at the editorial board meeting that Southwest is not asking for any city investment in the terminal expansion and Customs facility addition to Hobby. The $100 million cost of the project is to be covered by debt backed by Southwest and paid off through ticket surcharges.
Clark said Customs waits at IAH are among the worst in the nation. "If Houston can secure additional agents, they should be deployed to address the chronic understaffing IAH experiences every day," Clark said.
But Ricks asked, "Is Houston going to let 20 Customs agents stand in the way of a $1.6 billion-a-year economic impact? If we can't solve finding 20 Customs agents in this economy, then Houston, we do have a problem." Ricks said staffing is covered by a $17.50-per-international passenger fee.
Reduced fares
Kelly said he believes Southwest's entry into the Houston market will drive down prices and increase passengers at both airports.
"If you make the air fares affordable, the people will fly -- a gigantic increase. We're arguing to you the pie is going to increase," Kelly said.
Kelly stopped short of saying how much fares would come down. The volatility of fuel prices makes it difficult to forecast what Southwest's fares would be, he said, but added Southwest has enjoyed 39 straight years of profitability in part through offering cheaper fares than its competitors.
"We're talking about bringing you more flights, more competition, low fares. It'll create more jobs, over 10,000 jobs is what is predicted," Kelly said. "What you'll see will be a significant reduction in fares" if Southwest flies those routes from Houston, Kelly said.
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