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Mario Diaz

Uber to be available at Houston airports now

This was part of the original vehicle for hire ordinance overhaul, to be implemented later. “Later” has now arrived.

Uber

Uber and other app-based ride service companies won coveted access to Houston’s airports Wednesday when the City Council quietly passed new regulations, a move likely to increase competition in a market that has long been a stronghold for traditional taxi drivers.

[…]

Mayor Annise Parker attributed the relative quiet to the fact that the months-long debate about ride share companies offered closure on most issues, and the airport regulations came as no surprise.

“We did the heavy lifting when we passed the overall TNC (transportation networking company) regulations,” Parker said.

“If you just walk into an airport and you walk out the front we expect you to get into a taxi,” Parker said. “But if you have an existing relationship with a TNC, whether it’s Uber or Lyft or some other TNC, and you’ve programmed a ride, we want you to be able to get off the plane and get your app and have that vehicle dispatched appropriately. We think we have come up with a good solution.”

That solution is similar to rules established in San Francisco and Nashville, the only other U.S. cities to formally regulate companies like Uber at their airports. Chicago has rules that allow only UberTaxi, a service that connects riders to professional taxi drivers, at its two major airports.

Houston’s rules require the app-based companies to get airport-specific permits and pay the same fees for rides originating from airports that individual taxi drivers pay – $2.75 at Bush Intercontinental and $1.25 at Hobby per departing ride. Before drivers are allowed to register and operate at the airport, the companies would need to be permitted by the city.

There are some other technical aspects to this, but as noted it all passed without a fuss. We tend to either park at the airport or arrange our own rides, so I doubt my family and I would use this much. I did take a cab home from IAH a litte while ago returning from a business trip, so I would be curious to know how the fares would compare. Are you likely to use Uber to or from the airport? Leave a comment and let us know. Hair Balls has more.

City and county make a deal on airport toll road revenues

Good.

HCTRA

After two years of negotiations, the Houston City Council approved an agreement Wednesday that provides toll revenue from the airport connector to the city for the first time – 24.5 percent, to be precise.

Officials at Harris County, which has collected all revenue on the segment since it opened in January 2000, said it only made sense to play nice. County leaders have called parts of the original 1997 city-county agreement governing construction, maintenance and tolls “puzzling” and “bizarre.”

The city expects to collect about $1 million annually under the revised agreement, which still must be approved by the county Commissioners Court.

“We do have a better working relationship than we’ve ever had,” Mayor Annise Parker said. “Every so often governments can sit down and say ‘We wrote this in the contract, but we can do something better.’ ”

In a 2011 letter to the county proposing the two sides split toll revenues on the connector, Houston Airport System Director Mario Diaz noted the city contributed 43 percent of the $31.7 million construction cost and maintains a roughly 1.3-mile stretch of the road on airport property. Diaz also discussed the 1997 agreement, which authorized the city to collect toll revenues only if it built its own toll plaza – which could have resulted in redundant facilities or in the dismantling of the county’s existing plaza.

“That would just border on the line of pure stupidity to tear down a perfectly good plaza and build another one,” Commissioner Steve Radack said. “If the city’s happy with this and the toll road authority’s happy with it and they recommend it, I don’t have a problem with it.”

See here for the background. You will note that at the time, Steve Radack did have a problem with this idea. The fact that he is on board with this plan is a clear sign that city-county relations are at the highest point they’ve been in recent memory. Or possibly a sign of the impending apocalypse. Either way, kudos all around.

First Hobby expansion details announced

Moving forward at Hobby Airport.

The Southwest Airlines-proposed expansion, green-lighted by the Houston City Council last May, calls for construction by the end of 2015 of a new concourse with five gates capable of accommodating midsize aircraft; a federal inspection services facility with 16 stations; three additional baggage carousels; six security checkpoints; and an expanded ticket counter.

The concourse is being designed by Dallas-based architecture and interior design firm Corgan Associates. It is the same firm Southwest selected for a major renovation project under way at Dallas Love Field, home to its headquarters.

Southwest, which is preparing to become an international carrier after its 2010 acquisition of AirTran Airways, will foot the bill for the 280,000-square-foot, two-story expansion that will increase the square footage of Houston’s second largest airport by more than 40 percent. The estimated price tag is $150 million. Construction is to begin in May.

“It’s more than just a terminal expansion or a runway or one of the other many other pro-jects that we do at the airports,” Samar Mukhopadhyay, the Houston Airport System’s chief development officer, told a City Council budget committee on Monday. “This is going to change the functionality, the look and feel of Hobby Airport after we finish.”

Council approved the expansion plan last May. Southwest expects to being international flights from Hobby by 2015, and construction is supposed to begin this year. It’s an exciting time, though it probably won’t feel that way if you’re actually flying in and out of Hobby during construction.

One of the concerns raised by Chicago-based United Airlines, which fought Southwest’s proposal last year, was that staffing a new customs facility would require reassigning officers from Bush Intercontinental Airport – its largest hub – and the Port of Houston to Hobby.

While acknowledging the tough budget climate in Washington, [Houston Airport System Director Mario] Diaz said the airport system is preparing to begin serious discussions with customs about staffing the new facility at Hobby without taking away federal inspectors from Bush, currently Houston’s only international airport.

Saba Abashawl, the airport system’s director of external affairs, told the committee the airport system and the city will be “working very closely” with the Houston congressional delegation to secure adequate federal funding for customs officers.

There’s plenty of time to get this worked out before flights actually depart from Hobby for international destinations. Who knows, maybe the atmosphere in Congress will be slightly less poisonous by then, or perhaps the economy will have taken off to the point that there’s less fanaticism about austerity, thus making the appropriation of funds for a few Customs agents a routine matter. And if there’s a problem with the local delegation, then there’s nothing stopping HAS or Southwest Airlines from forming a PAC to support candidates that will work with them. Point being, while the issues that United raised were real, they’re hardly intractable, and they certainly shouldn’t have been a reason to forego this kind of opportunity. One way or another, there’s a solution.

How do you say “J’accuse!” in Korean?

Here we go again with the Korea kerfuffle.

CM Helena Brown

City Councilwoman Helena Brown on Tuesday accused Mayor Annise Parker of sabotaging her recent taxpayer-funded trip to Asia to promote direct air service between Seoul and Houston.

Brown joined Houston Airport Director Mario Diaz in visits to Beijing and Taipei early this month but did not meet with Korean airline officials. The itinerary originally included meetings in Seoul, but those were canceled shortly before the trip because Korean airline executives would not be available, according to a spokeswoman for the mayor.

According to a statement issued by Brown’s office on Tuesday, “the mayor did everything possible to undermine and sabotage the planned trip. Mayor Parker had no intention to cooperate in any capacity with CM Brown’s efforts to serve the constituents, as Mayor Parker continues to place political expediency above the responsibilities of public office to the great disservice of the Asian community and the Houston community as a whole.”

Parker spokeswoman Janice Evans responded, “Council Member Brown’s trip to Asia was handled the same as any other trip. The mayor’s assistant for international trade and development was assigned to help and provide support. The mayor even offered to help the council member in rescheduling the trip once Asiana Airlines sent notice it would be unable to accommodate a meeting.”

Emails obtained by the Chronicle indicate that members of the mayor’s administration provided Brown with an itinerary, assisted her with a visa application, selected and wrapped gifts to present to Asian dignitaries, made travel arrangements and prepared a briefing binder. The mayor also personally approved Brown’s travel authorization that estimated more than $16,000 for expenses.

Here’s the full statement from CM Brown. I have not seen any further response from the Mayor to this, nor have I seen any statement from others singled out by CM Brown, namely Andy Icken and Mario Diaz, so you’ll have to judge the allegations by your own evaluation of Brown’s veracity and reliability. (Turns out Mayor Parker is out of town, so well played on the timing.) One could attempt to be charitable to all involved and chalk this up as a series of miscommunications, but then one would have to note the irony of CM Brown, who dodges meetings with Mayor Parker and whose preferred means of expression is the written statement, complaining about other people not adequately communicating with her.

So why did CM Brown go to Korea?

According to the Press, which is really killing it on this story, it wasn’t to meet with airline officials.

CM Helena Brown

Houston City Council Member Helena Brown issued a press release Wednesday touting her recent trip to Asia, which she funded with $11,000 in public money, as a “successful business trip” — but it’s become clear her journey to Asia was anything but, and, in fact, completely different than the city’s official trip to bring direct flights from several Asian capitols to Houston.

Brown, who represents thousands of South Koreans in District A, was initially invited by Houston Airport System Director, Mario Diaz, to go to Korea and meet airlines there, but weeks ago, those airlines cancelled meetings with Diaz, who subsequently called off the trip. Brown, however, did not, continuing on to Korea — but for unofficial purposes.

What’s more, after she booked her $11,000 ticket to Asia, she launched a separate fundraising campaign in the local South Korean business community to raise donations for what, by all appearances, appears to have been a vacation trip to Korea.

She did not meet with any Korean airlines, City Secretary Jessica Michan told the Houston Press. Nor did she accompany Diaz in any part of his itinerary, which involved meeting aviation officials in Beijing and in Taipei, said Darian Ward, a Houston Airport System spokesperson.

It’s unclear what, if anything, Brown accomplished while in Asia. Her office did not return repeated interview requests, and even Michan displayed frustration at her reticence, saying, “It’s her. She really needs to answer these questions. She’s the one who needs to explain why she ended up going.”

Well, she did visit the demilitarized zone, according to the story. I’ve done that myself – I accompanied Tiffany to Seoul in 2001 where she was attending a conference, and took a packaged bus tour from the hotel we were in to the DMZ. I concur that it’s a profound experience, but I bought my own ticket for it. I can’t wait to hear what comes next in this story, which by the way has gone national as correctly predicted by Peter in the comments. Maybe someone outside Houston can get her to do more than just issue statements about what she’s doing.

More on CM Brown’s trip to Korea

Hair Balls recently noted that CM Helena Brown recently submitted an expense report for nearly $11,000 for a plane ticket to Korea; they raised issues about her soliciting donations outside the allowed fundraising period to cover that expense. The Chron picks up the story.

CM Helena Brown

A statement released by Brown’s office Tuesday states that her adviser William Park – who is not a paid member of her staff – sent an email to Korean community leaders saying that if they wanted to sponsor a businessman on the trip they could do so via Brown’s office.

“That statement was sent in error. While CM (council member) Brown could be the vehicle by which private financial assistance of non-city employees could be handled, CM Brown understood full well that this type of situation might be misconstrued as a campaign contribution during the “black-out” period and therefore instructed all potential contributors who communicated to her to deal privately with potential delegation participants instead,” the statement reads.

Brown was in Asia from June 30 through July 7 seeking to increase the number of direct flights from Asia to Houston, according to the statement.

Brown’s statement says she was invited on the trip by Houston Airport System Director Mario Diaz, but an email from a spokeswoman for Mayor Annise Parker states that Brown asked to accompany Diaz, who visited Asia in a bid to lay the groundwork for more nonstop flights from Asia to Houston.

Establishing a direct flight from Houston to Incheon is “one of her many priorities of public office,” according to the statement.

[…]

According to records obtained by the Houston Chronicle, Brown charged $10,883.57 to a city purchasing card for flights to Tokyo, Taipei, Beijing and Seoul. The money comes from her council office budget. The charges do not include a return trip fare to Houston, though Brown still can file for reimbursements. It is not apparent from the report whether she covered the expenses of any other travelers.

Diaz was apparently originally scheduled to go to Korea as well, but that wound up getting canceled. Brown went on her own and met with officials there. One can only imagine how those conversations went.

This all raises as many questions as it answers. I guess I’m just stunned that Brown has “priorities of public office” that include spending money on anything. I don’t know how one would square all her anti-government anti-spending rhetoric that we’ve been subjected to with this revelation, but then I think all of that rhetoric is so much palaver. I’m glad it’s not my job to try to make it all tie together. What will the people who support her and actually buy into that baloney think of this?

Council approves Hobby expansion plan

In the end, it wasn’t close.

City Council approved a plan Wednesday that will give Houston two international commercial airports, settling a public policy debate that raged for months over whether flights from Hobby Airport to Latin America would boost the local economy with new passengers or divide the city against itself and trigger layoffs, canceled routes and stagnation at Bush Intercontinental Airport.

Within hours, United Airlines told employees in a bulletin that, as a result of the Council vote, it would be cutting planned operations at Bush Intercontinental by 10 percent and eliminating 1,300 Houston jobs, with the first buy-outs, transfers or pink slips going out in the fall. It immediately canceled planned service to Auckland, New Zealand.

Council’s 16-1 vote, according to the bulletin, also puts in “significant doubt” whether United will complete a planned $700 million expansion of Terminal B at Bush Intercontinental on which it broke ground in January.

“We believe that splitting Houston’s international air service is the wrong decision for the city’s future, but we respect the fact that City Council did not agree,” United spokeswoman Mary Clark said in a released statement.

Houston Airport Director Mario Diaz declined to comment on United’s jobs announcement.

Mayor Annise Parker was dubious of United’s post-vote stance.

“I’ll wait to see that they do that,” she said. “I think United is committed to this city and that they’re going to do their best to continue to grow jobs here in Houston. We already know that we provide a much more competitive environment in terms of cost of living and work force than any of their other hub areas. They committed early on that we would be the largest hub in the largest airline in the world and that’s the commitment I expect them to keep.”

She added later, “They’ve stated continuously that they welcome competition. That competition is at least three years away. So, for United to say there are going to be 1,300 people laid off next week or so, that’s just not reasonable. Because nothing is going to happen until that terminal is built. There’s no competition today. So any decisions they make in terms of personnel are based on other things not the vote we cast today.”

See here for more on United’s reaction, here for more on Council’s vote, and here for the Mayor’s press release. I’ll note that United has already cut some 1300 jobs in Houston, which they did after the merger with Continental. Maybe they knew all along that this was going to happen, and were planning for it even back then. You’d think with that kind of foresight they’d have no trouble handling a little competition. It’s truly impressive how badly they’ve lost the PR battle over this – just read the comments on that first Houston Politics link for a sample. Honestly, in the end I believe this will prove to be way overblown. We’re talking five gates, and a small range of destinations. For United to claim that they had to cut planned service to Auckland, New Zealand, a destination Southwest and its 737s couldn’t reach if we built them a wormhole at Hobby, as a result of this just show how ludicrous their reaction has been. Hair Balls has more.

Hobby jobs claims

There’s been a lot of discussion about how many jobs the proposal to expand Hobby Airport and allow Southwest Airlines to begin flying internationally from there may or may not create. This story gets to the heart of what really matters.

Expanding Hobby Airport so Southwest Airlines can begin flying to Latin America will create more than 10,000 local jobs, perhaps as many as 18,000.

Or it will eliminate 3,700 jobs in the Houston area.

To City Council members preparing for a historic vote on whether Houston should have two international airports, competing studies, with their statistical formulas that extrapolate jobs from airplane passengers, are dueling crystal balls that offer radically different visions of Houston’s economic future. Will Southwest’s new flights to Latin America lower fares by all carriers, increase the number of passengers at both Hobby and Bush Intercontinental airports and create jobs to serve that growth? Or will it divert so many passengers from Bush that United and other airlines cancel flights and dry up employment opportunities that rely on those lost passengers?

[…]

Such a discussion, [Houston Airport System Director Mario] Diaz said, misses the point.

“We’re trying to be precise about a forecast, and that’s where people are getting wrapped around the axle,” Diaz said. The larger question is, does Hobby expansion help Houston more than it hurts it, he said. Tapping into the growing Mexican middle class market by offering lower air fares to Houston will bring in more visitors with money to spend at restaurants and hotels, he said.

“When you ask the (Greater) Houston Partnership, when you ask the Convention & Visitors Bureau, when you ask all of these chambers, they’ve all come to the same conclusion, that whatever the numbers are, it’ll be a net benefit to the city,” Diaz said.

That’s been my sense all along as well. The job creation projections strike me the same way that the obligatory economic projections of a sporting event like the Super Bowl or the Final Four do, more voodoo than anything else. I think Diaz frames the issue correctly, and I believe there’s another group of people who will use this service and benefit from it. There are loads of bus companies in this town that provide round trip service into places like Monterrey and Mexico City. A check on Greyhound’s website told me that a trip to Mexico City takes literally all day – 22 to 26 hours, with transfers – and cost $118; a trip to Monterrey ranged from 10 to 15 hours and cost $53. I doubt Southwest or any air carrier can match the prices, but don’t you think there will be plenty of people willing to pay a bit more to turn a 24-hour trip into a 2-hour trip? That may not be something that will benefit most of the people making most of the noise about this proposal, but it will benefit a lot of Houstonians. That is what this really comes down to. More choices, more options. I have a hard time seeing how that won’t be better for us.

“Reasonable accommodation”

According to a legal opinion provided by the City Attorney’s office, Houston must provide “reasonable accommodation” to Southwest Airlines for its proposal to offer international flights at Hobby Airport.

In a memo accompanying the legal opinion, City Attorney David Feldman wrote that “consideration of such economic issues for the community cannot be controlling; the City’s obligation to provide reasonable accommodation to Southwest is paramount, irrespective of such issues.” In other words, if Council finds Southwest’s request reasonable it cannot reject it based on economic projections.

If the Federal Aviation Administration finds that the city is not complying with its obligations, it could suspend millions of dollars in airport improvement program grant funds and disqualify Houston from receiving future grants, according to a legal opinion prepared for the city by attorney Peter Kirsch of Kaplan Kirsch & Rockwell, a firm based in Denver and Washington, D.C., that specializes in aviation law.

Tuesday’s council hearing and two neighborhood meetings in the next week are part of the process the city will use to determine whether Southwest’s request is reasonable, said Janice Evans, spokeswoman for Mayor Annise Parker. The plan calls for a $1.50 fee increase on every Hobby traveler’s ticket to cover the costs of construction for the airport’s expansion.

Houston Airport System Director Mario Diaz, who last month formally recommended the city support Southwest’s plan, said of the legal opinion, “It’s what I’ve been saying since Day One.”

The city could reject a proposal for Hobby to go global only if the airport did not have the capacity to accommodate international flights, if noise or other environmental concerns could not be overcome or if public safety were threatened, Diaz said. None of those conditions apply in the case of Southwest’s plan, Diaz said.

You can see a copy of Feldman’s memo here and a copy of the legal analysis here. The summary and conclusions are enough to give you the big picture, but do check out the last section, entitled “Consequences for violating legal obligations” for an idea of what could happen if the Federal Aviation Administration doesn’t care for the city’s actions. United disagrees with this analysis, and that says to me that one way or another this is going to end up in court, but if this analysis is accurate that may not be the city’s biggest risk factor here.

Council had a joint meeting of the Budget & Fiscal Affairs and Transportation, Technology & Infrastructure committees yesterday at City Hall at which Feldman and both airlines made presentations. There will two be public hearings on this topic as well. The first is tonight, May 9, from 6 p.m. to 8 p.m. at the DoubleTree Hotel, 15747 JFK Blvd. The second is scheduled for Tuesday, May 15, from 6 p.m. to 8 p.m. at the Houston Marriott South, 9100 Gulf Freeway. The Texas Organizing Project spent some time visiting residents in the Hobby area to ask them about their thoughts and concerns, and had its own public meeting with 100 of those residents to discuss this on Sunday. According to a letter they sent to Mayor Parker yesterday, there was strong support among those who attended their meeting for the Hobby expansion. Here’s your chance to make your voice heard, so attend one of these meetings if you have something to say about this.

Here come the lobbyists

It’s getting real in the United versus Southwest fight.

This was one of the less impolite images I found on Google

Both sides have enlisted A-list lobbying teams. United’s includes Marty Stein, who until little more than a year ago was Mayor Annise Parker’s agenda director; former City Attorney Anthony Hall and Greater Houston Partnership Airports Task Force Chair Michelle Baden. Southwest has former City Councilwoman Graci Saenz, and Jeri Brooks, communications director for Parker’s 2009 campaign, lobbying at City Hall. State Rep. Garnet Coleman also is advising Southwest.

Darrin Hall, Parker’s deputy chief of staff, called it the largest and most intense lobbying effort he has ever seen in eight years at City Hall.

Then, there is the money. A Chronicle review of campaign contribution records dating back to 2007 turned up nearly $90,000 in donations to current council members, the mayor and the 2010 inaugural celebration by Continental’s employees political action committee, and past and present Continental/United executives. Parker alone has received $52,298 since the beginning of her last term as controller.

It’s not just money, explained Chris Bell, a former city councilman and former congressman.

“Politics is a relationship business and those relationships are built up over time,” he said. Continental built those relationships, not with just campaign cash, but by sponsoring and buying tables at local events, supporting arts organizations, lobbying and being out in the community.

Southwest, by contrast, doesn’t do campaign contributions. United built up all that good will as Continental, and going by public reaction at least it’s not clear how much of it has carried over. Of course, if you go by Council’s reaction you get a different picture; Mayor Parker, on the other hand, is more in line with public sentiment. It’s too early to say how this will play out, but I will say this: The best counterweight to lobbyists and campaign contributions is your own voice. If you have an opinion about this, whoever it favors or opposes, call your Council member, the five At Large members, and the Mayor and tell them what you think. Be brief, be clear, and be polite to whoever answers the phone. They do pay attention, and they keep track of how many of each type of call they get on an issue like this. Sending an actual piece of snail mail is as good as a call, sending an email is not as good but better than nothing. Unless you have your own lobbyist to do this work for you, it’s your best bet.

Council is skeptical of Hobby International

Not so clear skies for expanding Hobby Airport into an international terminal.

A consultant’s study that forecasts an economic boon for Houston if Hobby is made into an international airport came under fire from city council members Monday as “biased” and “custom-made just to satisfy the demand of Southwest” Airlines, which is asking the city for permission to build a $100 million Customs facility and five-gate expansion at Hobby.

In a three-hour grilling of Houston Airports Director Mario Diaz, council members complained that the numbers in the study strained credulity, that they were kept in the dark about Southwest’s pitch for at least eight months, that airport officials have been condescending and that council and others should have been asked for input before Diaz recommended approval of the Hobby expansion.

According to the study, an international Hobby would lead to the creation of 10,000 jobs and inject $1.6 billion annually into the Houston area economy, as well as lower air fares. Comments from the general public have been overwhelmingly in support of Southwest’s plan to start flying to Mexico and the Caribbean.

The study is here; it and other supporting documents can be found here. I’ve skimmed the study but have not given it a full read yet.

“What may be the largest issue perhaps of the century, you all have blown it in my view,” Councilman C.O. Bradford told Diaz. “This rollout simply has been a complete disaster. I mean lack of transparency, arbitrary time lines, total disregard, disrespect for council. It’s just unconscionable.”

Councilman Al Hoang said, “I feel that this report is already biased, it’s already custom-made just to satisfy the demand of Southwest.”

[…]

Councilman Andrew Burks questioned the numbers in the report and singled out a projected fare of $133 to Bogota.

“You can’t even fly from Houston to Lubbock on Southwest for $133,” Burks said. “I really want to just throw this proposal out the window because, right now, when I see numbers that can’t match, it just don’t work for me.”

I can’t address Council members’ complaints that they have been disrespected, but from what I have seen of the study it seems pretty sensible to me. The case for international flights at Hobby is straightforward. There’s currently almost no competition for the market to Mexico and the rest of Latin America. Hobby is well suited to provide low cost carrier flights to that market, and Houston is about as ideal a population center for those flights as you could want. Several other cities have more than one international terminal, and recent history shows that not only can that work, the original carrier winds up increasing service as well. (See also page 18 of the study.) Unlike United, Southwest has other options for its international gateway if Houston passes; Orange County’s John Wayne Airport has a new Federal Inspection Service and would be a good alternative for Southwest.

Like I’ve said, I’m not the expert on this in the family – I’m working on getting her to contribute to this topic once more. I can’t speak to the specific objections Council members have raised. Perhaps the topline numbers – ten thousand jobs! $1.5 billion in economic activity! – are overstated. But honestly, does anyone believe that Houston fliers would not benefit from the increased competition? I don’t get it. I hope this was just Council doing its due diligence and not rejecting out of hand what looks like a good deal to me.

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.

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.

Catching up on United versus Southwest

There have been a few news stories of interest since we first heard about the Southwest Airlines plan for international flights at Hobby Airport, which is being vigorously opposed by United, who wants to keep IAH as the only international airport in Houston. United has a couple of Congressmen on their side.

In this corner...

Two local congressmen have asked Mayor Annise Parker not to turn Hobby Airport into an international operation because they are concerned Houston would not get sufficient customs staffing to avoid long delays for international travelers.

The opposition of U.S. Reps. Kevin Brady, R-The Woodlands, and Al Green, D-Houston, casts doubt on whether Houston should become a two-international-airport city, even if city-commissioned studies indicate it would be an economic boon.

In a letter sent to Parker this week, Brady and Green echo an argument made by United Airlines, which has been lobbying against the project at City Hall, saying they oppose equipping Hobby with a federal inspection services facility because they fear it will divert customs officers from Bush Intercontinental. Resulting delays, United argues, will cause international passengers to book flights through another hub.

Brady and Green argue that an international Hobby would “divert, not increase” the number of customs officers in Houston.

[…]

In his annual State of the Airports address Thursday, [Houston Airport System Director Mario] Diaz lamented what he described as persistently low customs staffing at Bush Intercontinental.

Last week, Diaz told the Houston Chronicle that if council approved an international Hobby, “the city could make a very, very good argument that those (customs) services should be enhanced.” Several times on Thursday, Diaz acknowledged the challenge in lobbying for federal funding.

“If we can make the correct understanding to the Appropriations Committee that (we need more) Customs and Border Protection … staffing, they’ll have to find something else that they may be able to cut, but that’s a budget problem,” Diaz said.

The story quotes an expert who notes that the level of Customs agent staffing at a given airport is determined by the demand for international passenger arrivals at that airport. Keep all that in mind for now.

This story questioned the effect on air fares of Southwest’s arrival on the international scene.

And in this corner...

According to data compiled by Hotwire.com, average airfares from Houston to Cancun and other Mexican destinations have increased steadily since March 2009 and were higher across the board last month than they were in 2007 before the onset of the recession and also in 2008 when record high-oil prices jacked up all types of airfares.

High-priced oil also factors in the escalating fares now, along with an improving economy.

Average airfare from Houston to Cancun last month was $630, compared to $495 a year ago.

[…]

Airfare analysts say the increased competition probably would bring fares down to some extent, but probably not as drastically as fliers are envisioning.

Rick Seaney, CEO of FareCompare.com, said Southwest probably would start out by offering sales reducing fares up to 40 percent and then “settle down” a few months later into a price range reducing fares 5 to 10 percent.

Still, he said, “when you add capacity to a route, prices are going to be lower.”

But with high jet fuel prices and tougher competition from merged mega-carriers like Delta and United, which are able to charge higher fares on certain routes where there is less competition, it’s not as easy for Southwest to offer the startlingly low fares that made it famous as the country’s pioneering domestic budget carrier.

“A lot of those things that allowed Southwest to keep the price points really low are not as easy today,” Seaney said, noting that it depends on how intent Southwest is “to make a stronghold.”

“My guess is since this is the first time Southwest would actually be flying international, it’d be top on their priority list,” he said.

If that’s not good enough for you, Southwest is now making the job creation pitch in their favor.

Opening Hobby Airport to commercial international flights will create 10,000 jobs, bring 1.6 million more air travelers through Houston annually and inject an additional $1.6 billion a year into the local economy, according to a Southwest Airlines executive who has seen city-commissioned studies on the matter.

“We’re asking for an opportunity to invest $100 million in a new building in your city to provide more passengers, 1.6 million a year, a huge economic gain for the city,” Ron Ricks, executive vice president and chief legal and regulatory officer for Southwest Airlines, told the Houston Chronicle editorial board Tuesday.

[…]

Southwest CEO Gary Kelly said repeatedly at the editorial board meeting that Southwest is not asking for any city investment in the terminal expansion and Customs facility addition to Hobby. The $100 million cost of the project is to be covered by debt backed by Southwest and paid off through ticket surcharges.

Clark said Customs waits at IAH are among the worst in the nation. “If Houston can secure additional agents, they should be deployed to address the chronic understaffing IAH experiences every day,” Clark said.

But Ricks asked, “Is Houston going to let 20 Customs agents stand in the way of a $1.6 billion-a-year economic impact? If we can’t solve finding 20 Customs agents in this economy, then Houston, we do have a problem.” Ricks said staffing is covered by a $17.50-per-international passenger fee.

Kelly said he believes Southwest’s entry into the Houston market will drive down prices and increase passengers at both airports.

“If you make the air fares affordable, the people will fly – a gigantic increase. We’re arguing to you the pie is going to increase,” Kelly said.

United says “Nuh uh!” in response to that:

United Airlines officials said Wednesday that allowing international commercial flights at Hobby Airport would force the carrier to cut 1,300 Houston jobs and dozens of flights from Bush Intercontinental Airport, and that city-paid consultants and Southwest Airlines are using unrealistic data to support the proposal.

In a letter to Mayor Annise Parker on Wednesday, United CEO Jeff Smisek said “the assumptions that underlie the analysis are so contrived it is clear they were designed to reach a predetermined conclusion.”

Smisek said United is commissioning its own study and urged Parker to “delay this decision, which you agree will impact Houston’s aviation industry and economic future for decades to come.”

Golly, couldn’t United mitigate those job losses by moving all the people they relocated to Chicago after the “merger” back to Houston? I’m just saying.

Nene Foxhall, United’s executive vice president of communications and government affairs, said if the Hobby proposal goes through, the airline will have to rethink proceeding with the next stage of an expansion project at Bush Intercontinental’s Terminal B – a potential $1 billion investment.

United claims that Southwest’s study was made on excessively optimistic assumptions. I have no trouble believing that, but I’m not particularly inclined to give United and its blackmail attempt a whole lot of credence.

Smisek says in his letter, which you can see here, that United “welcomes competition from AirTran, Southwest and all carriers for international service at IAH, where there are ample gates and facilities.” And with that, I turn the blog over to Tiffany once again for her long-awaited followup analysis:

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.

So there you have it. And what she didn’t tell you is that she did field work for her thesis with Southwest, Continental, American and Boeing. High time it came in handy. In any event, we should get those long-awaited reports Monday – the recommendation from HAS Director Mario Diaz about whether or not to expand Hobby, and the city’s economic impact studies – to be followed by discussion and eventually a Council vote on what to do. A statement from the Texas Organizing Project calling on the city to ensure all voices are heard in this process is here.