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Mayor Hobby Memo

Mayor Hobby Memo

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Published by: chris_moran on Mar 19, 2012
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03/19/2012

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Crry
or
HousroN
Officeof the
Moyor
lnleroffice
Correspondence
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o:
City
Council
Members
From:
MayorAnniseD.
Parker
Date:
March
12-2012
-.
.:Y
'
itt
n-jv-
Subject:
Hobby
Airporl
"rry'
The
attached
memorandum
describes,
in
detail,
theprocess
we
will
use
to
considerwhether
the
City
of
Houston
supports
the creation
of
an
IntemationalTerminal
at
Hobby
Airport.
The
key
dates
are
that the
Directorof
Aviation
will
submit
a
report
to
me on
April
9th
recommending
futureactions.
If
we concludethat we support thecfeation
of
an
IntemationalTerminal
at
Hobbythen
City
Council
will
be asked
to
approve
a
Memorandum
of
Understanding
on
May
9th.
 
Southwest
AirlinesInternational
Services
at
Hobby
Airport
-
Timeline
to
DecisionPurposeThis white
paper
provides
a
description
how
an
important
recommendation
will
be
made
in
response
to
the
request
by
Southwest
Airlines
(Southwest)
to
expand
air
service
at
the
William
P.
Hobbyairport
of
the Houston
Airport
System.Southwest
has
indicated
thatit
will
extendits
competitive
reach
into
various
intemational
markets
if
it
receives
the approval
and
support
of
the
City
of
Houston.
Background
Southwest
Airlines
has
takenthe strategic decision to
enter
the
regionalinternational
passenger
market
by
proposing
to offer
servicebetween
Mexico,
and
other Central andSouth
American
countries,
and
Houston. The
airline
has
identified
substantial
traffic
between
cities inMexico
and
Houston,
and
believes
these
travelers
can
afford
and
would
make
use
of
a
low-cost
air
traffic
option
to Houston
for
purposes
of
business, leisure,
tourism
and
shopping
if
Southwest were
to
be
permitted
to
operate
internationallyfrom
the
William
P.
Hobbyairport(HOU,Hobby).To facilitate
Southwest's
forayinto intemational
passenger
markets
would
require
a
substantialinvestment
in
the
Hobby
Airport
terminal,
as
well
as
the'need
to
reachagreement
with
the federalgovernment
for
the creation
of
a
Federal InspectionsService
(FIS),
and
the
resolutionof
economic
and
competitive
issues
which inevitably
arise.
United
Airlines
and
other carrierscontinueto
provide
extensive
international
traffic
between Houston
and
Central
and
South
Americafrom
Bush
International
GAff)
ln
order to
reach
a
decisionregarding Southwest'sproposal,
an
analysis
of what
is
in
the
best
interest
of
the Houston
Airport
system
and the
City
of
Houstonis underway.Thedecision whetherto
permitinternational
operations
fromHobby
Airport
will
not
be
made
in
a
vacuum.
The
perspectives
of
manystakeholders,
including
the needs
of
passengersand the
views of airlines,
will
be
weighed.The approach
forthis important
recommendation
involves
a
discussion amongthe leadership
of
the
airport,
city
leadership,the
business
community,
federal
regulatory
agencies,and
the Houstoncongressional delegation.
To
understand
the
implications(financial,
operational,
and
economic)
will
necessitate
the
use
of
consultants
and
experts
who
are
knowledgeable
about
the
issues, costs and
benefits
involved in
such
a
decision. The approach
for this
analysis
and
decision-making
combinesHouston
Airport
System staff members
with
experts
invitedtoparticipatein
a
peer
review
of theproposed
competitiveinternational
routeexpansion
and
the impacts that
are
forecasted
to
occur.
Preparation
and
Actions to
be
Taken
The
timelineto
a
decision
on
the Southwest
request
will
involve
three
key
actions.
l.
A
recommendation
to
the
Mayor
whether
to
approve
or
rejectSouthwest'srequest.
lf
therecommendationwere
affirmative
and
the
Mayor
decided toproceed,
2.
Airport
staff
would
conclude
a
memorandum
of
agreement(MOA)
with
Southwest
for
presentationto the
City
Council.
3.
The memorandum
of
agreement
would
be
submitted to the
City
Council
for
approval.
All
three actions
areatpresent
contemplated
to
be
taken before the
end
of
May 2012.
If
the
recommendation
is
to
disapprove
the
request,
a
discussion
will
first
be
held
with
Southwest,supplemented
with
a
formal
letter
explaining
the
reasons
therefore,
with
a
copy to
be
providedto
the
Federal
Aviation
Administration,
Airports District Office
in
Dallas.
 
A
very important
considerationleadingto the
right
decision
to
be
recommendedinvolvesthe assembly
of
documents,
including
thepreparation
of
a
routeanalysis.
This
analysis
will
evaluate the
likely
markets
that
Southwest
would
enter,
the frequency
of
service
that it maylookto
operate,and
will
provide
a
forecast
of
the number
of
incremental
passengers
that
would
takeadvantage
ofthe
new
service.
It
will
also showwhat the impact
might
be
on current
passenger
traffic
at
Bush
Intercontinental
Airport.An
economic
impactanalysisdescribing the
likely
benefits to the
City
and
area
gross
domestic
product
will
likewise
be
prepared,using
as
the
base set
of
assumptionsthe output
of
the routeanalysis modeldeveloped
to
determine the incremental
passenger
flows-local
and
transfer-derived
from
the
proposed
new
service.Comparablesituations
across
cities in
the
United
States
will
be
reviewed
to
determinewhether
the request
to
Houston
was
unique
and
without
precedent,or whetherthere exist
conditionssimilarto
what
would
exist
in
Houston
if
Southwest's
request
wereapproved.There
are
clearly
governmental
and
regulatory
issues
that
will
need
to
be
weighed
in
reaching
this historic
decision. Risks
will
be
identifiedfor
consideration.Questions
of financing
the investmentto
be made,
what creditwould
be
available
to
support the
financing
needs,and
whowould
bear
thepossible
down-
side
risk
ofa
shortfallin
reaching projectedlevels
oftraffic
all
need
to
beaddressed.
Stakeholders
It
will
be
importantto
gauge
thegeneralsentiment
of
businessand
civic
organizations,
which
represent
the interests
of
passengers,
regardingthe
possibility
of new international
service
at
HOU.
To
date,
key
members
of
the Greater HoustonPartnership,theHouston
Convention
and
Visitor's
Bureau, theHouston
Hispanic
Chamber
of
Commerce,
and
the
Bay Area
Houston
Economic
Partnershiphave
been
givenpreliminaryinformation
and
have
been requested
tosubmit
anyquestions
or
statements
they may
wishto
be
considered
in
aniving
at
a
recommendation.
Similarly,
it
will
be
important
to understand
and
weigh
the
views
of the
international
airlines
thatcurrently
operate at
IAH.
We havealreadymet
and
corresponded
with
United
Airlines
and
we
will
shortly
be
engagingthe other
internationalairlines
at
IAH
to
understand
their interests.
There may
be
other organizationsthat may
request
a
briefing,
orwe may
wish tobrief in further
detail
at
the appropriatetime.
It
will
be
importantthat wemeet
with
the federal
regulatory
agenciessuch
as
the Federal
Aviation
Administration,
Customs
and
Border Protection,
and
the
Transportation
Security
Administrationtoinform
them
of
thepending
assessment
underway. We
will
seek
specific
guidance
from
each
concerningthe
responsibility
the
City
and
the Houston
Airporl
System
may have,both
to
Southwest
and
to
any otherparties,
in
interest over
this
matter.
Finally,
members
of
our congressional delegation
have been
alertedto the
on-going
assessment and haveasked
thatwe
brief
them
as
well.
Asthey
will
have
an
interest
in
theoutcome
from
both
a
budget
and
regulatory
oversightperspective,over the course
of
the
next
few
weekswe
will
undertake
to
make
these
briefings.
Timeline
Given
the abovediscussion
and
anticipated
and
required actions,the accompanyingdetailed
schedule
of
events
is
provided
togive
a sense
for
the order
and
timing of
each.

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