Houston’s city council voted to approve allowing Southwest Airlines to build a small (and let’s stress the word small since it’s just 5 gates total with just 4 dedicated to SWA) international terminal at Houston Hobby airport. United’s Jeff Smisek decides to make an internal company pronouncement that they’ll be eliminating 1300 jobs in Houston and likely will not be initiating the Houston to Auckland flight with their 787 deliveries either.

This is just bad form.

United clearly has been contemplating these changes to Houston for some time. You don’t make such a decision as a result of a city council decision and off the cuff. So far, I’ve seen no public announcement from United and certainly no indication of what those 1300 jobs actually do. In other words, the elimination of 1300 jobs in the Houston area is likely another step in the consolidation of the operations of ContiUnited’s merger.

But it makes a great public soundbite for a threat, no?

Furthermore, the Houston – Auckland flight was exciting and in some respects made sense way back when it was originally announced but the landscape has changed (again) and it is entirely likely that the revenue from such a flight didn’t make sense when compared to other opportunities to deploy the 787 to when it arrives.

Let’s not forget that airlines are businesses which require careful revenue management to yield the best income and profit possible. You do not run such businesses on the basis of a temper tantrum. Smisek isn’t going to be the guy who does so. So my conclusion is that this threat isn’t a threat but simply a well timed business decision designed to smack at a city council that isn’t allowing United to be its master.

And why should it? It isn’t as if the ContiUnited merger benefited Houston. It didn’t. It was known from the start that in such a merger where the headquarters would be located in the Chicago area jobs would be lost in Houston. No Big Surprise. Why should Houston reward United for having a near monopoly on flights in and out of Houston Intercontinental Airport?

For all the talk that airlines engage in about competition being good, I’ve never seen competition that an airline wanted to see show up. In fact, the airline industry is very reactive in a negative way to competition. Airlines have gone after other airlines with a genuine vengeance and intent to kill just for an airline introducing a route on “their” turf. These are real gang fights.

Oddly enough, every time a market gets competition into airports dominated by a single airline, everyone seems to win in one way or another. Cities see increased economic impacts. Airports see new revenues. Existing airlines (smart ones anyway) tune up their schedules and services and more often than not see *better* revenue performance than they had when it was a near monopoly.

Furthermore, it isn’t as if Houston is a new city for SWA. Southwest has done one hell of a lot of business in Houston over the years and has treated the city very well over that time. Why wouldn’t you want to work with an airline that has brought good to your area?

This was a bad move on United’s part. Bad for publicity, bad for the airline making this fight about jobs and bad for the industry as a whole as it just portrays these SuperLegacy airlines as bullies to large and small governments.

Filed under: Airline News by ajax