Houston's aviation chief announced his support Monday for a proposal by Southwest Airlines to fly to Latin America out of Hobby Airport, bringing the city one critical step closer to having two international airports.
At a news conference Monday, Houston Airport System Director Mario Diaz said that Chicago, with its two international airports, and Miami-Ft. Lauderdale have proven that competition lowers airfares and grows the number of passengers.
"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.
Diaz based his recommendation on the findings of two city-commissioned consultants, which found the proposal would bring at least 1.5 million additional travelers a year, create 10,000 new jobs and inject $1.6 billion a year into the local economy.
The consultants' conclusions were contained in a report that, until Monday, had been withheld from everyone except Southwest and United Airlines, which has been lobbying against the proposal, and Diaz had remained publicly neutral on whether Hobby should be allowed to compete for global routes with Bush Intercontinental Airport -- United's largest hub and Houston's only international airport.
The report notes that "United and its Star Alliance partners have a near monopoly" on service to Latin America, "operating 97 percent of the seats."
The fate of the proposal is now in the hands of Mayor Annise Parker and the City Council.
Decision this month
In a statement issued by Parker's office, the mayor said she is considering Diaz's recommendation and will convene meetings with the airlines, the business community, Houston residents, organized labor and others with a stake in the outcome.
"My decision, which I intend to reach by the end of April, will be based on what is best for the city and the flying public, not what may or may not be best for any one specific airline," she said in the statement. The city will decide only whether to support Southwest's proposal, the mayor explained. The federal government ultimately will decide whether international service will be allowed at Hobby.
If Parker decides to promote Diaz's recommendation, the city will start negotiating an agreement with Southwest to authorize its construction of a full-scale Customs facility and international terminal at Hobby, at a cost the Dallas-based carrier has estimated at $75 million to $100 million. Southwest has pledged to cover the cost through an increase in the passenger facility fee on every Hobby passenger from $3 to $4.50. The mayor tentatively has scheduled a vote on the agreement for next month.
Southwest's proposal -- along with its foray into the international travel business -- follows its purchase last year of Orlando-based AirTran Airways, which flies to Mexico and the Caribbean.
Since the acquisition, the merged carrier has announced new service to Cancun, Mexico, from such places as Austin, San Antonio and Denver. Last week, AirTran received the green light from the U.S. Department of Transportation to begin flying to Cancun from Chicago Midway International Airport.
The carrier's Houston proposal incited an epic tug of war with Chicago-based United, which merged with Houston's former hometown carrier Continental Airlines in 2010.
United has opposed the Hobby proposal from the moment it got wind of it in January, just days after breaking ground on a $1 billion terminal expansion project at Bush Intercontinental that it says now is in jeopardy. United officials have described the consultants' conclusions as "fiction" built on unrealistic, inflated data.
Former Continental Airlines CEO Gordon Bethune, who supports the United position, went so far as to tell the Chronicle editorial board last week, "I think their study says they're going to Bogota for $130. Somebody's smoking crack." United executives said at the same meeting they will be forced to decrease service at Bush Intercontinental by 10 percent and cut at least 1,300 jobs if the proposal goes as approved
"The proposal will significantly harm Bush Intercontinental, one of the region's leading economic engines, which brings jobs and business development to Houston," United spokeswoman Mary Clark said in an email, relying on an analysis United has in progress.
'Market expands'
Bob Montgomery, Southwest's vice president of airport affairs, said he was not surprised by the Houston Airport System report's conclusions because Southwest has seen the benefits whenever it enters a new market.
"You lower prices and the market expands," Montgomery said. "We believe that holds true domestically, and we believe it will hold true internationally."
The idea of Southwest flights to Mexico is wildly popular with travelers, who expect the competition to generate lower fares. In addition, there has been some backlash against United since the merger as it moved about 1,500 corporate jobs from Houston to Chicago. Fliers, including the mayor, also have complained about United's service as it undertakes the task of combining two major airlines.
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