Posted May 9, 2012, 4:20 PM
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Join Date: May 2006
Location: Los Angeles and Houston
Posts: 4,510
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The Greater Houston Partnership is getting behind Southwest. Huge blow to United:
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The Greater Houston Partnership is backing a plan to expand Hobby Airport that would allow for international flights.
The Partnership’s Business Issues Committee voted unanimously to support the plan to add five gates and a Customs facility to the airport. Southwest Airlines is pushing the plan so it can start flying to Mexico and the Caribbean. The Partnership’s board of directors is expected to adopt a resolution in support of Hobby expansion by the end of next week. “This is a critically important issue for Houston. We want two vibrant airports and the benefits that go along with it: more jobs, more travelers and a competitive advantage for our city,” said Tony Chase, chairman of the Partnership. United Airlines, which dominates the Latin American market from its base at Bush Intercontinental Airport, has fought the proposal. Company officials and consultants have argued that dividing the city’s international air traffic will cost jobs and routes.
A city consultant’s study concluded that the Hobby plan will create 10,000 jobs and inject $1.6 billion into the local economy. Having the most prominent voice in the Houston business community behind the Hobby plan is another blow to United, which merged with Houston hometown airline Continental in 2010. In pressing its case, United has been drawing on the good will and trust Continental generated as an active corporate citizen for decades. The Partnership’s immediate past board chairman is Larry Kellner, who was CEO of Continental from 2004 to 2009. The Partnership’s airports task force is chaired by Michelle Baden, United’s managing director for international and state affairs and a registered lobbyist for the airline at City Hall.
But the Partnership still backed the Southwest position.
“GHP has carefully deliberated on how increased competition changes the landscape within airport systems, having reviewed and analyzed extensive data and listened intently to representatives from the Houston Airport System, city of Houston, United and Southwest,” said Jeff Moseley, president and CEO of the Partnership. “We intend to keep working with all airlines and parties to protect and grow our region’s airports.”
City Council is scheduled to vote next month on the Hobby expansion plan.
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http://blog.chron.com/houstonpolitic...bby-expansion/
Southwest continues to play the "we are a Texas company" angle when lobbying for the Hobby expansion and it is no doubt working.
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FORTUNE -- United Continental Holdings is learning the hard way that it isn't wise to mess with Texas. The recently merged airline's decision to choose Chicago as its corporate headquarters over Continental's hometown of Houston appears to have resulted in a big loss of political capital with the city and its airport authority. The move could end up hitting United's bottom line hard as rival Southwest Airlines targets Houston to be its first international hub.
There are a lot of unintended consequences when it comes to merging two companies, especially two major international airlines. When Chicago-based United (UAL) announced its merger with Houston-based Continental at the end of 2010, the decision to move the newly combined airline's headquarters up to Chicago wasn't given much thought. United had struck what it had said was a sweetheart tax and rental deal with Chicago city officials a year earlier to keep the airline's headquarters in the Windy City in the event of a merger with a rival airline. Houston, apparently, never had a chance.
The loss of Houston as Continental's headquarters meant moving most of its major corporate functions to Chicago. Continental's then chief executive, Jeff Smisek, not even a year into the job, became the combined airline's chief executive. Smisek was quick to make the move out of Houston but the mood at Continental's headquarters in downtown Houston was somber, as much of the staff did not want to move to Chicago......
.....But all that intangible political capital was trashed when the airline merged with United. The loss of the Continental name was bad enough for the city, but the loss of the headquarters was a big blow to its ego. While Houston is still United's largest hub with over 17,000 employees living and working in the city, the loss of the C-suite appears to have been an unforgivable sin.
Southwest Airlines (LUV) is hoping to cash in on United throwing away its golden goose. It has brazenly asked Houston's airport authority to pay nearly $100 million to upgrade Hobby to receive international flights. The upgrade would allow Southwest to use Hobby to launch truly competitive international air service to the same locations where Continental has held an almost near-monopoly in non-stop service for years. This would, invariably, force Continental to lower prices on competing routes or to even pull out of some them completely if Southwest is able to put enough pressure on its margins.
This possible Southwest expansion also has larger implications for the airline industry. Southwest inherited international air service to a few destinations south of the border and to the Caribbean when it acquired AirTran in 2010. It has just started to put plans in motion to expand international service - under the Airtran banner, for now - launching routes to Mexico from Orange County, CA and San Antonio, TX. But unlike those locations, Houston is a major hub for Southwest and is seen as a major gateway to Latin America. If Hobby does go international, Southwest will be able to fill its Latin America-bound planes with passengers from any of the 36 domestic destinations it already serves through Hobby.
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http://features.blogs.fortune.cnn.co...hwest-houston/
An article from Bloomberg:
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Southwest’s plan would create Houston competition for some flights to Latin America, the region where United posts its highest yields, or average fare per mile, according to data compiled by Bloomberg. Latin America produced a bigger gain in first-quarter yields than routes in the U.S. or across the Atlantic and Pacific, United said.
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http://www.bloomberg.com/news/2012-0...-busy-hub.html
And here are some excerpts from United's "study":
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United has added more flts to IAH than any of its other hubs since the merger and IAH has grown more since 1996 alone than Hobby has in total current flying.
The comparison to the MIA/FLL situation is invalid because it neglects the fact that AA dismantled its San Juan hub during the same period to increase MIA, and that AA Latin traffic is actually down overall from where it was.
The comparison to ORD/MDW is also invalid since it ignores that Mexicana ceased operation in this period, that carriers were only backfilling, and total Latin traffic is actually down.
Comparison of multi-international airport cities in both Europe and the US show that multi-international airport cities have seen no growth or actually shrunk, while single international airport cities have seen growth.
United would pull 6% of current capacity and 4% of planned capacity as a result of loss of connecting traffic to support routes that Houston O&D doesn't warrant and/or are already unprofitable but supported by overall network. Future planned routes that would not be flown include Asia/Pacific, Transatlantic, and South America. Auckland and China are specifically cited as examples of routes that cannot be supported by Houston O&D alone, and would be harmed by shifting connecitng traffic on network supporting flights.
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http://keepiahstrong.com/docs/UnitedStudyMay3.pdf
lmao. United's scare tactics are so easy to see. It is really ridiculous.
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