Southwest Airlines says it will take 15-20 years to make back its $100 million investment at Hobby Airport. We started our conversation asking why it's worth waiting so long and why it's so valuable to do international business here in Houston.
Gary Kelly: You know what the best opportunity is? Right here in Houston. And you know why? Because the fares are so high. Why is that? Because there is no competition. It is a high fare market, that is monopolized by United out of Intercontinental Airport. Those are the kind of opportunities we look for around the country.
Ted Oberg: How long do you expect fares to stay low? Can I come back to you in two years, compare apples to apples and you're confident your flight will still be cheaper?
Gary Kelly: Absolutely, absolutely.
It is a promise that won't come true for years. If Southwest really does drive international fares down, they won't start until 2015. In the meantime, United Airlines says it will mean hundreds of job losses.
Ted Oberg: Do you think United is scared of you?
Gary Kelly: You know I can't really say what motivates any of our competitors. Clearly this is an attempt to keep us from growing.
Ted Oberg: Will it hurt United?
Gary Kelly: That's for them to assess, but clearly it should not be the policy of a city or government to protect one company.
The $100 million deal is not done -- not yet -- and while Kelly and his co-workers were celebrating Wednesday morning, he knows he's not even close to selling his first international ticket out of town.
Ted Oberg: It appears you have the votes, next week, week after, whenever council passes it on. You have a worthy adversary in United Airlines is probably a nice way of saying it. How tough do you expect this fight to be in Washington?
Gary Kelly: Well, I can't speculate about what might happen in the future. We're used to this. We've had opposition from legacy carriers from the very beginning, before we even started flying. So it wouldn't shock me if we continue to see resistance going forward. But we're on the side of right here and the administration is I know for a fact is concerned with creating jobs. This is a great way to create jobs.
Ted Oberg: Do you believe 10,000 jobs can be created as a result of this deal in Houston?
Gary Kelly: I believe it's more than 10,000 jobs. No one can guarantee what the jobs are, but opportunities to grow are hard to come by and this is a wonderful opportunity to grow, not just at Hobby but also at Bush.
That 10,000 job figure comes from a city report. It's been widely criticized as outlandish, but Southwest embraces it despite the fact they don't anticipate hiring any more than 50 to 100 additional Southwest employees at Hobby.
Our entire conversations with the CEOs of United and Southwest are in the video player at the top of this page.
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