Houston Strategies

The key to growing Houston as a global airline hub

I've posted previously here and here about Houston as a hub for international flights, but some recent articles have me a little concerned about the longer-term picture. The Economist has a story about the coming rise of low fare carriers in Mexico:

"One of the most valuable markets is for travel between Mexico and the United States, where an estimated 20m people of Mexican origin now live. American low-cost carriers such as Frontier and America West already fly to Mexico from cities relatively near the border. Another, JetBlue, may start to fly there later this year.

Ash Huzenlaub, an entrepreneur in Fort Worth, Texas, is starting a new low-cost carrier, Mexus Airlines, to serve this lucrative traffic. He plans to start flying this year, as long as he gets the landing slots. He says that none of his flights will cost more than $300, on routes that today can cost twice that. Mr Huzenlaub argues that the current Mexico-America traffic of about 15m passengers a year is artificially depressed by the high fares of the Mexican duopoly. The big American full-cost airlines that fly to Mexico charge even more. Cheap flights, he says, would get the millions of Mexican-Americans who go back and forth across the border out of their buses and into the air, expanding the market closer to 30m."

This is great for Mexico and people who want to travel there, but it will put the squeeze on Continental at IAH, possibly forcing them to cut back on service. One solution: become more of a global transfer hub. For instance, connecting Asia to Latin America or Europe (esp. Spain) to Mexico. Those lucrative global passengers make it economic for Continental to offer more nonstop service to more destinations for Houstonians.

So what's the problem? Heavy-duty security requirements after Sept 11 have made it very painful for international travelers to connect through US airports. Many prefer to go out of their way to connect in Canada, Mexico, or elsewhere to avoid the hassles. It got so bad in Miami that Iberia Airlines, the Madrid-based Spanish airline, shut down a Latin America mini-hub there because too many people were getting stuck in US customs and immigration so they missed their connections. Doesn't it seem a little excessive to put somebody flying from, say, Madrid to Mexico through Houston, through full-blown US customs and immigration when they're not even staying here?

The problem is making absolutely sure those passengers don't "accidentally" miss their connection and stay in the US. It's a tough problem, but one that should be solvable with the right kind of secure design for the transfer holding area (think Tom Hanks at JFK in "The Terminal"). Continental, IAH, and local political representatives need to partner up with other hub airports to work with Homeland Security to come up with a international transfer security standard that will protect the US but let those passengers only have to deal with customs and immigration at their final destination. The economic benefits to the city, Continental, and IAH would be substantial.

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As a side note, I'd just like to say those people at Continental are pretty damn sharp. This announcement of new flights from LA to Mexico demonstrates their cleverness. They realized that all these ExpressJets were sitting idle overnighting at smaller Mexican airports, when they had enough time along with helpful time zone changes to actually make a quick run to LA and back (a red-eye) before their morning flight back to Houston - so some otherwise idle planes are now generating money. Smart move.

posted by Tory Gattis @ 9:19 PM