It seems the decision to allow Southwest Airlines to operate international routes from William P. Hobby Airport (HOU) has created a backlash from United Airlines.
When Houston City Council agreed with Southwest airlines to build a $100 million International clearance and arrivals terminal United were “unhappy” to say the least. It seems that “unhappiness” has now had serious repercussions.
- A 10% capacity cut at Houston-IAH
- The planned 787 operated service from Houston to Auckland has been withdrawn completely
- 1300 jobs based at the airport and associate services are now up for cut.
And it could get worse, with United threatening further losses. In a statement to the city council during the arguments United argued that it
“will drain passengers from Houston-IAH, resulting in a net loss of 3,700 jobs and $295 million in gross regional product annually in the Houston region.”
Southwest Airlines who will pay for the construction using ticket fees argued to the city council
“would open up new low-cost international travel competition to the area”
and
“It won’t cost the City of Houston a dime, but it will bring in more than $1 billion of additional revenue annually. It will also create thousands of new jobs and help continue to grow the Houston economy. The downside? There isn’t one—unless you’re Chicago-based United Continental Airlines and want to maintain a stranglehold on the international air service from Houston.”
Of course, this could be United using this decision as a convenient cover-up for making these cuts and not launch uneconomicly viable routes. But that’s just speculation. What is the hard reality is that it is going to hit people now.
Or it could be a tit-for-tat response to the expansion.
In either case, Houston-IAH will be the larger airport (and a massive United Hub) – and Houston-HOU will be a major Southwest base. It’ll be up to Southwest to prove that upgrading Houston-HOU was the right move if they can get the right flow of International passengers through the doors.
UA gives up a route from IAF-ACK?
What? Is SW starting the same route?
IAH-AKL. Call it sour grapes or budgetary constraints.
Depends on your view of course…
Great! That means I’ll still have to go through LAX or SFO to get to AKL. I much prefer NZ’s business premier and premium economy over UA’s. As for the FA’s, there is no contest–NZ wins on all counts.
I wonder if IAH-LOS will be the first 787 route (as announced it is), currently it is run with a 777, but I’m not sure if that is demand based or range based. If IAH-LOS isn’t first, I am pretty sure IAH will not be the recipient of the first 787 route (long haul at least).
Isn’t Denver getting UA’s first 787 flight?
So Houston gives up $295 Million to gain $1 Billion in additional annual revenue? Sounds like a winner to me.
United would be fools to shift traffic to CLE, ORD, or DEN. All of those hubs suffer from winter weather delays.
If I can’t connect in IAH to avoid IRROPS, I will take my money to another carrier.
Debonaire, you must have never experienced IRROPs at IAH due to thunderstorms. I’ve spent hours on the tarmac at places like Shreveport, Baton Rouge and San Antonio when those cities weren’t in my travel plans. DEN is probably the most reliable hub in the system, together with LAX (which has a geographic limitation).
The WN statement that the city isn’t paying a dime is terribly misleading as there are significant tax concessions being given to WN. Not saying it isn’t a net win for the city, but the statement is wrong and you can’t run your city only on marginal economic activity, taxes need to be paid by all.
To the extent that WN builds up their hub at HOU, which is the likely outcome as they are increasing their gate count, some of WN increase at HOU will come out of the UA share at IAH – that’s inevitable as O/D traffic is important to the profitability of flights and some O/D traffic will shift. Is it the end of the IAH hub? No way. Will it mean it will be somewhat reduced? Sure thing. There will fewer flights on routes with competing WN service and some network effects from that.
Of course it doesn’t tie directly to AKL, and the decision not to serve AKL is likely based on the fact that oil is higher than it was when they announced the route.