Off the Kuff Rotating Header Image

May 10th, 2012:

Two cities, one argument about airports

Turns out Houston isn’t the only city squabbling with United Airlines about airport expansions. There’s a similar fight going on in Chicago.

O'Hare International Airport

Mayor Rahm Emanuel has gotten tough with the teachers union and muscled the City Council. But will he mess with somebody his own size?

Mr. Emanuel is at odds with airline boss Jeff Smisek over expansion of O’Hare International Airport. The CEO of United Continental Holdings Inc. jabbed at Mr. Emanuel recently, saying there’s no need to finish the multibillion-dollar project launched seven years ago.

The new mayor shot back with a demand to start talks now on the final phase of the expansion. The deadline for starting those negotiations isn’t until next March.

[…]

Mr. Emanuel can’t afford to let O’Hare fall behind rival airports. Mr. Smisek, on the other hand, has a different agenda. Unlike airline execs of the past, whose expansionist strategies dovetailed with the city’s desire for an ever-bigger O’Hare, he’s focused on the bottom line. He aims to boost profits by reducing capacity and competition in the airline industry, which has a long history of big spending, bloody fare wars and monumental losses. His merger of Houston-based Continental Airlines Inc. and Chicago’s UAL Corp. advanced those aims while creating an airline with unprecedented market power, the largest in the industry.

Proceeding with the final phase of the O’Hare expansion would undercut Mr. Smisek’s agenda, adding capacity that could allow new airlines into the airport, where United and AMR Corp.’s American Airlines now control 80 percent of the flights. Their stranglehold makes it hard for newcomers to get into O’Hare and maybe offer lower fares. It also means that United and American pay most of the cost of any expansion projects at O’Hare, giving them clout in construction negotiations.

The terms of the debate are different in Chicago, but the bottom line is the same. What’s best for the city may not be best for United Airlines, and vice versa. There’s nothing particularly remarkable about a large company with near-monopoly control in a given market doing whatever it can to keep competition out. What is remarkable is that the argument to allow such competition would somehow be damaging to consumers is given any credibility.

Which brings me to Tuesday’s Council session, in which United and Southwest made their case before a joint meeting of the Budget & Fiscal Affairs and Transportation, Technology & Infrastructure committees.

CEO Gary Kelly spoke for Southwest. He framed the debate in his company’s David-and-Goliath narrative of the scrappy low-cost carrier trying to crack a market dominated by the big boys.

Kelly opened with, “It is déjà vu.” Southwest had to fight just to keep from being killed in its crib by legacy carriers that schemed and litigated all the way to the U.S. Supreme Court to keep the airline from starting up, by Kelly’s version of history.

“That group included Continental Airlines,” Kelly said, the hometown carrier that merged with United in 2010. “It was a cynical move.”

In 1971, Southwest sought to reopen Hobby, which had closed two years earlier when Houston Intercontinental Airport opened.

“Then, as now, the legacy carriers went ballistic,” Kelly said, “… insisting that reopening Hobby would cause irreparable damage to Intercontinental.”

[…]

[United] delivered PowerPoint slides with statistics on how over the past 19 years Southwest has increased its fares at a faster rate than the legacy carriers have and juxtaposed the city’s projection of a Houston-Bogota flight for $133 on Southwest with the airline’s recent advertised rate of $160 just to get from Chicago to Oklahoma City.

John Gebo, United’s senior vice president of financial planning, even contested Southwest’s central contention that its entry into Houston’s international travel market will lower fares:

“There are cases where Southwest’s fares are lower. There are cases where they’re higher. It is a fallacy that Southwest’s fares are always lower.”

They also focused on the future instead of history. A council vote to expand Hobby, they said, would prompt them to reconsider a $700 million investment they have planned at Bush’s Terminal B. United broke ground on the project in January, unaware that later that same day Kelly would be meeting with Mayor Annise Parker to discuss Hobby expansion.

Let me refer you back to the two posts in which my wife Tiffany Tyler analyzed Southwest’s proposal and the claims United was making at the time, which seem to have evolved somewhat. I understand United’s fear of this proposal. I understand their threats regarding Terminal B at IAH, though given the growth projections for IAH and the fact that they want to close down the former Continental hub in Cleveland it’s hard for me to take those threats too seriously – where else are they going to go? Unlike Southwest, which says it will go to San Antonio for their Latin American and Caribbean business if Hobby is not available to them, they’re pretty much locked in. What I don’t understand is how having more competition, even if it’s just for a handful of Latin American routes, can be bad for travelers. It makes no sense to me, and according to his press release it makes no sense to CM Andrew Burks, either. I hope in the end it makes no sense to the rest of Council.

CD34 candidate Villalobos busted by the feds

This is not the sort of news one wants to make as a candidate.

Armando Villalobos

Cameron County District Attorney Armando R. Villalobos vowed Monday to fight a federal indictment filed against him and his former law partner Eduardo “Eddie” Lucio.

Villalobos, 44, who is also seeking the Democratic Party’s nomination to represent the newly created Congressional District 34, said that in his seven years as district attorney he has always acted in the best interest of the people of Cameron County and “I have never attempted to use this office for my own financial gain.”

A federal grand jury handed up a 12-count indictment against Villalobos and Lucio, 43, charging them with violating the Racketeer Influenced and Corrupt Organizations Act and one count of conspiracy to violate the RICO Act.

Lucio is not related to the state legislators of the same name.

Villalobos was also charged with seven counts of extortion and three counts of honest services fraud. Lucio is charged with three counts of extortion and two counts of honest services fraud.

Their case is tied to that of former 404th state District Judge Abel C. Limas, who last year pleaded guilty to racketeering. His sentencing is scheduled for later this year.

[…]

Attorney Joel Androphy of Houston and Norton A. Colvin Jr. of Brownsville represent Villalobos.

“This is (only) a piece of paper,” Androphy said of the indictment against Villalobos, adding that the defense has not been given the opportunity to respond to it, to rebut allegations or to speak to the grand jury.

“It is one side of the story. He will be vindicated,” Androphy added.

Colvin said that Villalobos, “like any citizen, is presumed innocent. We really believe that as this develops, he will be shown to be innocent.”

Attorney John T. Blaylock of Harlingen, who represents Lucio, said, “My client is innocent. The indictment was obtained by using people the government coerced into saying things. It’s a very weak indictment.”

Blaylock said he looks forward to trying the case. “It’s going to be kind of fun. It’s going to fall apart. They haven’t done their homework,” Blaylock said.

Blaylock maintained that, “we’re here because the government has its dancing chickens” — who are trying to protect family members from indictment — adding that as was done in carnivals, as the heat on a hot plate was turned up, the chickens dance.

“They’ve had a lot of heat, and now they are performing,” Blaylock said of Limas and other defendants who are cooperating with the U.S. Attorney’s Office.

Well, we’ll see about that. Not surprisingly, some people are calling on him to resign.

County Judge Carlos Cascos, a Republican serving his second term, said the issue is not partisan politics, rather a question of whether the accused district attorney can operate an “effective and efficient” office while facing a 34-page federal indictment alleging years of corruption.

“I don’t believe he can,” Cascos said Tuesday. “It’s tough. That particular office that deals with all kinds of crimes at different levels whether criminal or domestic – you got to focus.”

Cascos added that the indictment could cast a pall on the department.

“It could bring into suspect some of the cases that may be brought up, maybe some of the prior cases,” he said. “I mean, I think defense lawyers are looking at some of these cases and seeing if anything may have looked kind of … quirky.”

Hard to argue with the reasoning, though if his lawyers really can back up their big talk then I can understand why he wouldn’t resign. For what it’s worth, Jerry Eversole didn’t resign as County Commissioner until nine months after he’d been indicted by the feds, not long before he pleaded out. Of course, any time you have to cite Jerry Eversole as a reason for doing something, the odds are pretty good you’re doing it wrong.

What a mess. The FBI’s press release is here, and a copy of the indictment is here. That first story I linked has a lot of the details. I interviewed two other candidates for CD34, Ramiro Garza and Anthony Troiani; I did try to reach Villalobos’ campaign early on, but no one ever replied to the email I sent. One other opponent has joined the call for him to resign, and I won’t be surprised if others follow. Like I said, what a mess. BOR and Grits have more.

Endorsement watch: Three’s company

It’s not uncommon to see dual endorsements in multi-candidate races. Even the Chron did one for the 2009 Mayor’s race. But this is the first time I can ever recall seeing a three-way endorsement.

The creation of District 36 has attracted a field of candidates on the Republican side comparable in number to an event such as the Kentucky Derby. A few have held or now hold public office, but many of the 12 candidates on the GOP primary ballot are political newcomers. Given the sheer number of candidates making this race, a runoff seems likely. That being the case, we recommend District 36 voters’ consideration of the following three candidates:

[…]

We encourage District 36 voters to give consideration to state Sen. Mike Jackson, Kim Morrell and Ky D. Griffin in the Republican primary.

Seriously? They couldn’t even narrow it down to Jackson and whoever they thought was most likely to make it to a runoff with him? Why even bother? Better to just wait for the runoff, if one happens, and pick from the two finalists. I don’t see how this helps anyone make a choice.

On a side note, Campos has an update on the Chron’s endorsement process this year.

In Harris County, if you are running for Constable, Justice of the Peace, State Board of Education, and a few other races, you won’t get screened by the Chron E-Board. That’s the way it goes these days.

Again I say “Seriously?” I found the time, all by myself, to interview 44 candidates, and they can’t be bothered to hold screenings for these offices? I can’t wait for their next editorial lecture bemoaning the lack of voter engagement and participation. Sheesh.

Texas blog roundup for the week of May 7

The Texas Progressive Alliance thinks Mrs. Sarkozy would have been the better candidate than her husband as it brings you this week’s roundup.

(more…)