Under the proposal by United, which merged with Continental this year, the Chicago-based airline would spend $686 million to expand and renovate Terminal B. The city is being asked to contribute $288 million via a $3-per-passenger fee for the Houston Airport System and, if needed, the issuance of bonds to fund the city’s share.
City Council tagged the measure on Wednesday, a routine procedure that allows extra time for review and the answering of councilmembers’ questions. It is expected to come up for a vote at next week’s regular council session. We urge its passage.
The proposed work on Terminal B is another in a series of infrastructure improvements that will be necessary for the Houston region to fulfill its enormous economic promise. It is also a competitive necessity for both the Houston hub of the new United, the airlines’ largest, and the airline itself. The city’s self-interest is obvious: Improving the terminal figures to further solidify the deal between Continental and United, a partnership of major significance for Houston and the region. Translation: jobs.
Under the United proposal, the terminal would be expanded, would be easier for passengers to navigate and would feature more amenities than the current Terminal B.
On that last point, the airline would handle the selection of concessionaires and vendors, in exchange for a 10 percent cut of the take, up to $1 million per year.
While I would agree that this approach is superior to the no-bid method that had been used previously, the Chron got this exactly backwards. It’s the city that gets 10% of the concession take, with a cap at $1 million. United gets the rest. That $1 million cap is in place for the entire length of the deal, which needless to say won’t be as much in real terms down the line. That strikes me as something that maybe ought to be reconsidered.
In addition, according to this analysis by the SEIU of the deal, United still does have discretion about participating in Phases 2 and 3, meaning they’re only on the hook for the $97 million they’re committing for Phase 1. They also report that there’s no commitments to contract with Houston-based businesses. I’m taking their word for it on all this, as I have not read the deal myself. This is because I still can’t find it anywhere on the City of Houston or Houston Airport System webpages. Maybe it’s there somewhere, but if so it’s hiding from me. Isn’t that a problem, too? We need some more light on this one. Maybe it’s a fine deal, but I can’t tell from what is and isn’t out there to see.