March 20th, 2012

Hobby as an International Airport, Part 1

There is a storm brewing in the Houston Airport System between United Airlines and Southwest Airlines about Southwest wanting to start international flights from Hobby Airport. A lot of what I have been reading on Twitter, Facebook, and news website comments is the excitement that Southwest would do this, how awesome Hobby Airport is, and how United is a big bad bully for objecting to it. As great as competition sounds, I have my reservations about this project and the motives behind it.

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For starters, the question that initially popped into my mind was, “Why Hobby and why now?”. I think the answer is in Southwest’s business model. While they have maintained the point-to-point flight system somewhat, there has also been a growth of mini-hubs at places like Hobby, Chicago Midway, Baltimore, Dallas Love, Orlando, and now, with its acquisition of AirTran, Atlanta. Southwest knows that they cannot effectively start international flights without traffic from Houston and rather than connect that traffic somewhere like Orlando or Atlanta, they want it to go non-stop.

If we all remember correctly, IAH was originally built to accommodate all Houston air traffic and when it initially opened, every airline at Hobby moved to Intercontinental. Hobby then became a general aviation airport. A few years later, Southwest started service to Hobby and other airlines did the same (including Continental Airlines). Southwest operated at both airports until 2005 when they announced they would leave Intercontinental due to costs. In that same article, the author states that Southwest prefers to fly out of smaller airports to avoid delays, we’ll get to that later. The city and eventually the Houston Airport System knew that Hobby could not handle a large expansion or a significant increase in air traffic.

But Stephan you say, Southwest is so much cheaper than the other guys, we need the competition. I can rebut that in one simple link, Can’t Call Southwest a Discount Airline These Days. And it is true, in general, Southwest is not any cheaper than the “legacy” carriers. Sure, there are sales and promotions that look really good on commercials but those prices are never available in large numbers. The other way Southwest makes itself appear less expensive is the super low prices they will offer on new destinations, such as Newark. When Southwest first opened their Newark operation they were offering unbelievably low fares to entice people to fly them. A few weeks later and those prices were gone and the average prices were back to just a little below what Continental was offering in the same markets.

The timing of all of this is also very intriguing. This announcement and ensuing scuffle comes right on the heels of the issues caused by the merger of Continental and United. Is it simply a power play by Southwest to stir up a little more “anti-United” sentiment? Is Southwest actually serious about international service? And if they are, why not start a few of those services from other airports? Are they going to wait until the proposed Hobby additions are completed? Southwest has mentioned wanting to start international flights in the past, but it has always been one of those things that is “on their radar” and not a huge priority. So why the “we want to start international flights” spiel now? Is it to cause controversy?

Next time we’ll explore the possible issues with expanding Hobby and why I think we should focus on IAH.

— Stephan

Comments

Kathy — Tuesday, March 20, 2012 1:58 pm

I’m not a big IAH fan – distance (from south of the city), traffic, longer security lines, etc. Also add the baggage fairs to the “other” fares and SW looks even better! Great article!

Kathy — Tuesday, March 20, 2012 1:59 pm

Oops – fares – sorry

Stephan — Tuesday, March 20, 2012 2:17 pm

Kathy, from the south of the city I could see the traffic argument but the longer security lines is a bit misleading. Hobby is at certain times worse than IAH. For people checking bags, sure, Southwest is attractive but that would be the only area where they are cheaper than their competitors.

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