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April 9th, 2012:

Houston Airport System sides with Southwest

Hot out of the inbox:

In a memorandum to Mayor Annise Parker, Houston Director of Aviation Mario Diaz recommends the City of Houston work with Southwest Airlines (Southwest) to expand the federal inspection services (FIS) facility at William P. Hobby Airport (HOU) to support scheduled commercial international service.

“I have concluded given Southwest’s existing and sizeable domestic network operation at Hobby, it would not be reasonable to require the airline to relocate to Bush Intercontinental Airport (IAH), or even conduct split operations – domestic service at Hobby and international service at Intercontinental,” said Diaz. “Therefore, it’s my recommendation we support Southwest’s request to begin the process of obtaining the necessary approvals to initiate international service at Hobby.”

Houston Airports commissioned two independent studies to evaluate the economic impact on the City of Houston from international flights operated by Southwest. Those studies, by two acknowledged experts in the aviation industry, found that international air service at HOU is projected to generate an additional 1.5 million passengers to, from and through Houston annually, creating more than 10,000 jobs and generating an annual economic impact of more than $1.6 billion.

In addition, the studies determined increased competition will result in an expanded market for all airlines that serve Houston. The findings note other metropolitan areas with more than one international airport – South Florida, Chicago, Washington, D.C. and New York/New Jersey – have seen expanded service, particularly where low-cost carriers like Southwest helped spur competition.

“By adding new international air service at Hobby, it creates competition in the Houston-Latin America market, leading to lower airfares and more travel options for the public,” concludes Diaz.

Mayor Parker is reviewing the study and seeking input from stakeholders before deciding whether to accept Mr. Diaz’ recommendation and seek City Council approval to enter into a Memorandum of Understanding to allow Southwest to pursue the necessary federal approvals for international flights at HOU.

During the week of April 16, Mr. Diaz will present his recommendation to a joint meeting of Houston City Council’s budget and fiscal affairs and transportation, technology and infrastructure committees as well as to the Greater Houston Partnership’s transportation committee.

You can go to www.fly2houston.com/hobbyinternational to see all of the supporting documents. Here’s Mayor Parker’s statement:

“I am carefully considering Southwest’s proposal and the recommendation of the city’s aviation director and will take all views into account. With City Council involvement, we will convene meetings with and seek input from stakeholders, including airlines, members of the business community, Houston residents, organized labor and other interested persons. 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.”

Mayor Parker noted that the City is only deciding whether to support Southwest’s proposal to expand gate space at Hobby. The authority for deciding whether international service will be allowed at Hobby rests with the federal government.

Here’s the Chron story. I haven’t seen a statement from either United or Southwest yet; the Texas Organizing Project put out another statement urging “the Mayor and City Council to listen to the people that live and work around the airport”. The studies are over, so let the politics begin.

Interview with Ornaldo Ybarra

Ornaldo Ybarra

This week we return to the State House and wrap up the Harris County interviews for the primary cycle. HD144, which mostly covers the city of Pasadena, is one of the stronger pickup opportunities for Democrats this fall, having been redrawn for 2012 as a majority Latino district that voted Democratic downballot in 2008. In fact, it’s sufficiently Democratic that two-term incumbent Republican Rep. Ken Legler decided to step down instead of fighting it out for re-election. Three Democrats, all of whom filed in December, are vying to replace Legler, with today’s interview subject being Ornaldo Ybarra. Ybarra is a Pasadena City Council member, a police officer, and a veteran of the United States Marine Corps. Here’s what we talked about:

Download the MP3 file

You can find a list of all interviews for this cycle, plus other related information, on my 2012 Harris County Primary Elections page. You can also follow this blog by liking its Facebook page.

Today’s the day for the airport report

Today’s the day when we get that report from Houston Airport System Director Mario Diaz that makes a recommendation to Mayor Parker and City Council about whether or not to expand Hobby Airport to include international flights. We will also get those two economic studies the city paid for to quantify the effect of such a decision. As we know, Southwest says greenlighting the expansion will be an economic jobs-creating boon for Houston, while United says just the opposite. In a Friday editorial, the Chron leans in Southwest’s direction.

Our call on this issue proceeds from the answer to a straightforward question: What is best for Houstonians and their city’s future? That is the question we expect to be uppermost in Houston City Council members’ minds as they deliberate this matter – well ahead of small-bore political considerations such as which party has ponied up how many dollars in campaign contributions or fund-raisers and the like. This is an issue with large regional implications and should be so addressed by council and Mayor Annise Parker. There are no home teams to favor in this.

As a general proposition, we believe the skies over Houston are big enough for both of these airlines to grow and prosper. And we believe that the future of this city and region is even bigger than the wild blue yonder they both call home.

That inclines us to favor welcoming Southwest’s entrepreneurial plan to expand Hobby at its own expense.

It’s hard for me to see how that’s not the right call. United’s argument largely boils down to a claim that you can only expand international travel at IAH, which in addition to being intuitively questionable also fails to hold up under a closer look at the numbers. To that effect, I presented another analysis of the situation by my wife, Tiffany Tyler. I’m reprinting that here today, partly because it was at the end of a long post on Friday and people may not have gotten to it and partly so I can link to her LinkedIn profile so you can get some idea of what her professional creds are. Here it is again:

First, thanks to all who responded favorably to my previous guest post. And yes, it’s been more than a weekend since I promised to write a follow-up. Unlike my spouse, I’m not conditioned to getting up at 5 am daily to create blog content, so it took me a while to work this in.

I’ve been reading with interest the “debate” around whether or not creating an international terminal at Hobby would be dilutive to the US Customs presence at Intercontinental. I’ve seen numerous comments from people saying things like, “the lines are too long at IAH as it is, this will only make it worse! They’ll take agents away!”

This got me thinking about the real numbers involved in the lines at International arrivals. Basically, it’s a function of how many people are getting off the plane at once. A busy airport like IAH has multiple flights coming in at the same time, especially when long haul flights from Europe and Asia arrive. An international terminal at Hobby would, at least in the beginning, have a much smaller number of flights and no 747s dumping 450 people at a time on Customs and Border Protection. Do the math:

The proposed Hobby scenario is 25 flights a day at 5 gates. The average capacity of a 737 in the Southwest fleet is 137 people. Southwest flies ONLY 737s. Even if they added the biggest, baddest 737 out there to give themselves greater range or capacity, they will top out at about 180 passengers. So 25 flights a day, spread over 10 hours – we’ll be generous and say 3 flights an hour, then round up capacity and say 500 people an hour through customs at Hobby, closer to 600 if they go with new 737-900ERs. This number is too large, in any real sense, but keep it in mind as we continue our mental math.

Compare that to IAH, where United and all of the other international carriers land something like at least twice that number of flights an hour (peak times when long haul flights come in from Europe or Asia) with an average capacity of a 747 or a 777 at 450 passengers PER PLANE. Look at the data, which I have taken straight from the Customs and Border Protection website, which can generate this handy table for any date range you select. This one is for 1 January 2011 to 1 January 2012.

So at peak times, Border Protection sees an average of 1100 or more people an hour through IAH. That makes our 500 passengers an hour through Hobby seem crazy-big. But stay with me. The data from CBP can’t be cut by day of the week, so I can’t tell if it’s appreciably worse on certain days. I’ve been on enough overnight flights to be leery of the low averages between 8 and 10 am, for instance. If you look at just 2 of the arrival schedules for cities in question with the proposed Southwest expansion, Mexico City and Cancun, as pulled from the handy schedule tool at http://fly2houston.com/:

You can see that United doesn’t bring in more than one 737 from either departure city before noon (at least on a Wednesday, the day I pulled the data). The majority of the flights come in during those peak average hours on the CBP chart. So it’s unclear to me that taking some passengers OUT of those IAH averages would be a bad thing. Given that the IAH Master Plan for 2011 (the last one available on their website) is estimating a 3.9% annual growth rate in international travel alone between now and 2015, and diversion of traffic from Cleveland when United (probably) draws down that hub in favor of Chicago, it seems to me there is still PLENTY of growth going on at IAH to sustain demand for international flights, even if you add a potential 500 passengers an hour that could go through Hobby instead.

The advantage I’d see for potential international travelers at Hobby, and frankly for CBP as well, is that at least in the short run, Southwest would be the only international carrier at Hobby, and for that length of time, the average number of passengers coming through per hour would be highly predictable and consistent. That would make staffing easy to model, and certainly have a smaller swing from valley to peak than they have at IAH. As a traveler, I’m having a hard time seeing a downside with this.

The funding mechanism for Customs agents has always seemed opaque to me. On the one hand, United is claiming that IAH is already understaffed and opening Hobby would take agents away form IAH. This presumes the number of customs agents in a city airport system is a zero sum game. Of course United also contended that they didn’t have an issue with Southwest flying internationally as long as they do it out of IAH, which as I’ve shown above is absolutely silly in terms of wait times for the passengers. If they could add more agents to IAH to handle that added traffic, why couldn’t they add agents at a new airport, making passengers at IAH no worse off, and possibly with an improved option for lower fares and reduced customs wait times at Hobby relative to IAH?

This all presumes that new aircraft types don’t drastically change the throughput of arrivals in the IAH customs hall independent of anything Southwest might or might not do, of course. Surely United wouldn’t be planning to add more folks to what is already an overcrowded CBP system, right? That’s what they’re trying to protect us all from! And yet, look at the data. According to Boeing’s order book, the old Continental ordered 25 787s and United ordered 25. It’s true that I can’t tell where these planes are INTENDED to go in the United Route system, or even if those 50 orders are still “firm” in Boeing’s books, but think about it for a few minutes. This aircraft is slightly larger than the 737 (210-290 passengers, depending on configuration), with a range suited for flights between, say Houston and Delhi, India. Imagine the customs issue at IAH when you add 75 extra people per flight.

But you might be more concerned about the Airbus order book. The A380 holds 525 passengers. Imagine IAH at peak hours with 525 people on each of the BA, Air France and Emirates flights and not the 450 currently on a 747. You won’t have to wait long to see what it will feel like. Lufthansa is bringing the A380 to IAH beginning this August, and that Frankfurt flight lands at about 2 pm, right before a number of those United flights from Mexico.

Color me skeptical about United’s position generally. They may lose some customers, and cut some flights, in response to Southwest opening international service. But even with the newest, longest range 737s, it’s still a 737. And that “fleet commonality” is a huge part of what makes Southwest able to do what they do to control costs. Trust me here, I wrote a doctoral thesis on it. For United, as for American and AeroMexico, the overall risk of passenger loss will go up over time as Southwest expands their schedule past the currently proposed 5 city pairs. But those airlines, with their diversified fleets and deeper, longer route structures (at least for the US-based carriers), will still have plenty of places to go that Southwest can’t get to in a 737, and passengers want to go those places. I find the Customs and Border Protection argument disingenuous, given the pressures already in the customs hall and the growth projections that are already part of the IAH Master Plan and the fleet growth plan of United, insofar as I can guess what it is from the Boeing order book.

It’s the customers who have the most to gain from a Hobby expansion gateway. And as a customer, I’ll bet on Southwest working in my interest before I’ll bet on the “new” United.

Thanks again to Tiffany Tyler for that in depth analysis. And now we wait to see what Mario Diaz has to say.

Hard times in the prison building business

Bad news for the mostly small counties that are left holding the bag on their bond debt, good news for the rest of us.

The unused and unneeded new jail in Jones County

The dusty West Texas ranch town of Anson, once known for its no-dancing law made famous in the 1984 movie “Footloose,” has a dubious new claim to fame: the Jail to Nowhere.

Completed almost two years ago to house 1,100 state convicts who never arrived, the $35 million lockup sits empty at the edge of the town of about 2,300 people. Its promise of creating 195 jobs and a $5 million annual boost to the local economy is just a distant, and bitter, memory for most folks.

“It’s been a huge disappointment,” said Jones County Judge Dale Spurgin, who has lobbied state officials for two years without success for help to avoid an approaching default on the bonds that were issued to build the lockup.

“We’ve been holding our breath for 22 months. … It looks like we’re going to have to keep on holding it.”

Spurgin is not alone.

In fact, research by the Austin American-Statesman shows, the situation is increasingly common in Texas and across the country because of declining crime rates, government budget cuts and increased use of treatment programs that have deflated a 20-year boom in building jails and prisons.

Although having fewer people locked up should be good news for Texas taxpayers, as the associated costs of Lone Star justice go down, the trend is drawing few cheers in Jones County and other places where taxes are going up to pay for the empty lockups.

While counties mostly operate jails, which house pre-trial prisoners and those serving time for minor offenses, more than a dozen counties in Texas have for years housed state prison convicts — either in their county jails or in prison-like lockups built with the help of private firms.

More than 30,000 of the state’s 93,000 county beds currently sit empty — both at county jails and at the ones built with county-private partnerships, like Anson, according to the Texas Commission on Jail Standards.

Consider that another potential hazard of privatization. As Grits says, if you want government to be run like a business, that means accepting a level of risk that’s much higher than one would normally want for, you know, a government entity. Unfortunately, it’s the taxpayers who bear that risk, whether they knew it or wanted it or not.

Sugar Land has its own Ashby

The unhappy dissenters part of it, anyway.

Today Southhampton, tomorrow the world!

The planned development of the city’s last piece of open land would turn the abandoned Imperial Sugar site – the very genesis of the city – into an $800 million urban space with museums, parks, luxury apartments, restaurants and a theater.

“It represents our evolution,” said Doug Adolph, a city spokesman, “where we’ve been and where we’re going.”

Yet the project has stirred vocal and passionate opposition. More than 2,000 residents signed a petition against part of the plan and homeowners formed a committee – complete with study groups, a website and an email distribution list – to track the project’s progress since 2007, fighting various components. Tuesday, before the City Council tentatively approved the project, many among the crowd of about 150 residents voiced emotional appeals against it.

The crux of their opposition: No more apartments.

Yeah, as Greg notes, the kid of apartments that will be built on this location are probably not what the folks who were speaking out against them have in mind. If they really want to put a “No Vacancy” sign up at Sugar Land’s city limits, I suppose that might be good for the other places that people would move to instead, but it’s not a good move for them. In the end, I suspect this will all blow over.