Southwest Airlines and United Airlines presented their respective cases for and against a proposed $100 million international terminal at Houston Hobby Airport to the local city council during a four-and-a-half hour meeting dedicated to the subject today.
The airlines have been locked in a battle over whether Southwest can build a new five-gate international federal inspection services (FIS) facility at Hobby for its planned international service to the Caribbean, Mexico and Central and South America for the past few months.
Gary Kelly, chief executive and chairman of Southwest, said the terminal would drive a two million increase in passenger traffic through Houston's airports annually by 2020 as well as a drop in airfares on international routes during the council hearing. He compared the current debate to the one between Southwest and Braniff Airlines over the reopening of Hobby in 1971.
Southwest compared competition between Hobby and Houston Intercontinental airport to that between Ft. Lauderdale-Hollywood International and Miami International airports in Florida. Low-fare competition at the former has resulted in more flights and lower fares at the latter it said, according to an analysis by the Boyd Group International's Michael Boyd.
Where Southwest was rosy, United was full of threats. Greg Hart, senior vice president, said the airline could shrink its operations at Intercontinental by as much as 10% by 2015 if the new FIS facility is approved during the hearing. These cuts could include current and planned flights to Asia and Europe.
United's support for the under construction $700 million terminal B project at Intercontinental would be in "jeopardy" if the FIS was approved, added Hart.
"If another FIS facility developed in the city of Houstonthe growth is better invested elsewhere in our system," said Hart.
United carried 95% of the 5.6 million passengers between Houston and destinations in Latin America in 2011, according to statistics from the Houston Airport System. The Airport System operates the city's airports.
The council did not comment on when it intends to vote on the proposed terminal.
The proposed terminal could have as much as a $1.6 billion positive economic impact on the city by lowering air fares and attracting up to 1.5 million additional travellers, according to a economic impact study by consultants GRA and InterVistas commissioned by the Airport System that was presented to the council last month.
Southwest would provide guarantee bonds issued by the Houston Airport System to finance the FIS project, if it is approved.