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.
I dunno that what you say about United makes sense. This United explanation sounds plausible to me. Businesses that plan and use projections often take losses from specific operations for a while as they wait for other changes that will turn those operations profitable.
“We expect to begin a 10 percent reduction in planned IAH capacity beginning with the fall 2012 schedule change. We have been maintaining some unprofitable flying at IAH based on our projections that future growth at the hub would make those routes profitable. Since that growth won’t occur, because there will be less international connecting traffic at IAH, we will have to reallocate that flying where it can earn a profit.”
The 1300 jobs lost after the merger was likely planned (and forced) trying to get value from the “synergy” (Meaningless Merger Speak) of the merger. Needing to find savings, salary is a big cost.
Of course, most american airlines can be taken down financially when a butterfly flaps it wings. Who they blame it on is irrelevant.
United’s reaction is a classic “hog and thunder” argument: There was thunder last night. The hog died this morning. Therefore, the thunder must have killed the hog.
I do hate to see the likelihood that the merged airline is going to end up with the United culture, which is similar to what CO was like during the Lorenzo days….I didn’t fly CO for years after unless I just had to.
I wish there was a thumbs up or thumbs down voting system here so we could get a feel of what others think of comments without posting a rebuttal ourselves….
Your readers may find this aviation industry analysis of how things have panned out in this controversy of interest: http://www.centreforaviation.com/analysis/united-airlines-walks-away-the-sore-loser-after-southwest-wins-international-expansion-from-hobby-75109
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