Yesterday, city council approved an agreement that will allow Southwest Airlines to go ahead with plans to expand Hobby Airport for international flights. The short-pants airline will foot the $150 million bill to add up to 280,000 sq. ft. to the terminal, including a new concourse and ticket counter, six security lanes, five gates, and a customs inspection hub. The plan, pictured above, also includes restructured roadways and a new parking garage with 2,500 spaces, mutating one of the wings of an airport designed as though it might be itself ready for takeoff:
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Those “entry roadway modifications” and the parking garage are expected to cost the Houston airport system about $67 million. Flights to Mexico, Central and South America, and the Caribbean are expected to begin in 2016; Mayor Parker, reports the Houston Chronicle, says that she might consider adding “international” to the airport’s name.
- City Council OKs deal with Southwest for Hobby expansion [Houston Chronicle]
- Houston City Council approves Southwest Airlines expansion at Hobby Airport [abc13]
- Hobby International Expansion [Fly2Houston]
- Hobby Airport’s international expansion plans revealed [Houston Business Journal]
Images: Fly2Houston
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That’s fantastic. And good for CoH that they’re having Southwest pay most of the bill.
I’m always curious how deals like that are structured. While SWA is the main user of the airport, its not “theirs”. And while the upgrades will obviously be a big benefit to them, do they just pay for it with nothing in return?
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It would be like a tenant putting in new flooring and a new kitchen in an apartment they rent. Sure they get the benefit but you don’t see that happening. (I do realize that SWA is a longer term “tenant” in this case.. I’m just sayin’)
Southwest will essentially “own” that space so long as they are in business (or at least until the space is so old it would need to be re-done anyway), so it doesn’t much matter who holds the title.
Businesses routinely make modifications to leased spaces when they move in, often quite major. In most office buildings, it’s assumed that when you move in you’ll gut the whole space and modify to suit. Retail too. (That’s one reason for the 3-year minimum lease!)
Many chain restaurants get a long-term land lease and build their building on it; it’s mostly a financing thing, and the land owner probably won’t kick ’em out in 20 years; and if that happens, they don’t care, since that building’s not worth much at that point, and is probably in need of a re-do anyway.
You don’t see it much in residential because there’s so many and various units people don’t need to modify to suit, they just find another place. Also, people are cheap, and residence is a money sink instead of source. But at the higher end, where a few bucks doesn’t matter as much, I think you’ll find plenty of modifications done by the occupant, or by the landlord as a condition of lease.
It will be rename Southwest Airlines Hobby Airport later.
cody: I remember a Loren Steffy article a couple of years ago about the value of terminals. At an airport the land doesn’t matter; the location and number of terminals does, and apparently the big airlines compete for them like mad. An airline can’t get far if it doesn’t have anywhere to put its planes. It’s the real reason that large airlines merge with mom & pop regionals – the big airline doesn’t want the smaller airline’s established business half as much as they want the terminal leases. Normally terminals are a finite resource – as this article shows, new ones don’t come quickly or cheaply. Southwest isn’t going to get “nothing in return.” They’re going to get a huge expansion. Suddenly they can put alot more planes in the sky. And they won’t even have to merge their corporate culture with someone else’s really crappy one to do it *cough*Continental*cough*.
melee/Sihaya: Cool, thanks for the info.