Expanding Hobby Airport to allow for international flights will cost the Houston area 3,700 jobs and $295 million in economic activity, according to a study released by United Airlines Thursday afternoon.
United’s conclusions contrast starkly with the projections of a study commissioned by the Houston Airport System that an international Hobby would create 10,000 jobs and inject $1.6 billion into the local economy annually.
The United study attempts to dissect the city study by challenging several assumptions, including what United considers unrealistically low fares on new routes. Much has been made of the city study’s finding that fares to Bogota would decrease from $739 to $133. Although it concedes the average fare would decrease, United finds that the city study overstates current fares and understates the projected fares.
Southwest and the city study assert that new low-fare routes would increase passengers at both airports.
“Competition is always good, but there is already plenty of competition at Bush where it can take advantage of the enormous economies of scale associated with a large hub,” said Barton Smith, one of the United study’s authors and professor emeritus of economics at the University of Houston. “Diminishing the volume of connecting flights through Bush could be very damaging. The HAS study finding that Southwest Airlines proposal would actually increase trips through Bush is just sheer nonsense.”
You can find United’s study here and a summary of its findings here. I guess United’s claim of 1300 lost jobs wasn’t sexy enough. This was posted late yesterday and I have not had the time to give it a read-through, but clearly United’s economists and whoever did the HAS study were operating under two completely different sets of assumptions. One or both of them must be wrong. I still think Darren Bush wimped out by not offering an actual opinion on this matter, but his advice to Council to “trust no one” sure seems apt. Let’s have one more study to break the tie!
The United study came out as the Greater Houston Partnership formally endorsed Hobby expansion.
“We want two vibrant airports and the benefits that go along with it: more jobs, more travelers and a competitive advantage for our city,” Greater Houston Partnership chairman Tony Chase said in a statement after a unanimous vote by one of the group’s 60 committees.
Partnership president Jeff Moseley said in the Wednesday statement that the organization “carefully deliberated on how increased competition changes the landscape within airport systems.”