Southwest approved to fly internationally from Houston Hobby; United throws temper tantrum

A high-profile struggle between two large airlines over the future of commercial aviation in Houston came to a conclusion earlier today:

City Council approved a plan Wednesday that will give Houston two international airports, settling a debate over whether flights from Hobby to Latin America would boost the local economy or divide the city against itself and trigger layoffs, canceled routes and stagnation at Bush Intercontinental Airport.

This plan was, of course, championed by Southwest Airlines, which had previously pledged to spend $100 million of their own money on a five-gate international facility at Hobby Airport. In return, Southwest would control four of the five gates, be exempted from paying rent to the city for use of the new facility, and receive a rebate linked to any increased sales that might occur at Hobby as a result of their new international services. Southwest plans to use the international terminal to offer flights to Mexico and the Carribean beginning in 2015, pending federal approvals.

However, no sooner had Southwest begun celebrating council's decision when the losing side issued a statement that could only be regarded as sour grapes:

Within hours, United Airlines told employees in a bulletin that, as a result of the council vote, it would be cutting planned operations at Bush Intercontinental by 10 percent and eliminating 1,300 Houston jobs, with the first buyouts, transfers or pink slips going out in the fall. It immediately canceled planned service to Auckland, New Zealand.

Council's 16-1 vote, according to the bulletin, also puts in "significant doubt" whether United will complete a planned $700 million expansion of Terminal B at Bush Intercontinental on which it broke ground in January.

Spiteful much, United? Maybe you guys should change your name to Cartman Airlines, i.e."screw you guys, I'm going home!"

Of course, it's easy to understand why United was opposed to this plan: with the exception of a handful of flights to Mexico City, Monterrey and San Salvador offered by AeroMexico, VivaAerobus and TACA, United has an absolute lock on flights out of Houston to Latin America and the Caribbean. The fact that Southwest plans to begin flying to some Latin American destinations out of Hobby in 2015 means that United will actually have to - gasp! - compete for local passengers on those routes. With competition, of course, comes lower airfares.

I'm not buying United's reasoning that today's decision is forcing them to cut 1,300 jobs, and neither is Mayor Annise Parker:

"They've stated continuously that they welcome competition. That competition is at least three years away. So, for United to say there are going to be 1,300 people laid off next week or so, that's just not reasonable. Because nothing is going to happen until that terminal is built. There's no competition today. So any decisions they make in terms of personnel are based on other things - not the vote we cast today."

Exactly. United (which posted a $448 million loss in the first quarter of this year) was probably planning to make these cuts all along and is simply using Council's vote as a convenient scapegoat. Take the cancellation of the planned flight between Houston and Auckland as an example: how, exactly, does Southwest's plan to fly to Mexico and the Caribbean in 2015 affect a service to New Zealand that was scheduled to begin later this year? More likely, United analysts came to realize that this ultra-long-haul route would not attract enough passengers to be profitable.

Besides, it's not like Southwest, operating out of four international gates at Hobby (which will limit the number of flights they can provide) and exclusively using Boeing 737 equipment (which will limit the range of the destinations they will be able to serve), is going to pose some sort of mortal threat to United's Caribbean and Latin American operations out of Bush Intercontinental.

In the weeks leading up to today's vote, Southwest and United had released dueling studies regarding the economic impact of opening Hobby to international flights: Southwest claimed that it would add between 10,000 and 18,000 jobs to the local economy, while United maintained that it would actually cost the city 3,700 jobs. While I share Kuff's contention that these competing projections are "more voodoo than anything else" - a consultant's study will say anything you pay them to say - the idea that competition on a handful of international air routes is actually bad for the local economy simply beggars belief. Furthermore, it's now clear that most, if not all, of United's projected 3,700 jobs lost will be coming from United itself (and that's in addition to the hundreds, if not thousands, of Houston jobs that were already lost when United consolidated headquarters operations in Chicago after the merger).

The funny thing is, had this dispute been between Southwest and pre-merger Continental, I might have been somewhat sympathetic to Continental, as it would have a fight between the hometown airline and the Dallas airline. But now, post-merger, it's a struggle between the Texas airline and the Illinois airline, and I just can't feel sympathetic to United's desire to maintain their near-monopoly on Latin American services.

I was always opposed to Continental merging with another carrier, and I was as annoyed as anyone when it finally happened. Since then, Southwest has become my preferred domestic carrier, and I hope to make use of their international services out of Hobby when they start. As for United: given that they still serve a considerable number of destinations from Houston, and given that I still have a rather large frequent flyer balance with them, I'm not going to try to claim that I will never fly them again. But today's temper tantrum certainly does not endear them to me, and from now on I'll be taking my business elsewhere whenever possible.