Southwest Airlines will receive almost $20 million in state and city incentives to open a new crew base at Austin-Bergstrom International Airport in March, allowing the airline's locally-based flight attendants and pilots to start and end their days in Austin.
"The benefits go to the traveling public," ABIA CEO Ghizlane Badawi said at a news conference Friday alongside Mayor Kirk Watson, Gov. Greg Abbott and Southwest Airlines CEO Bob Jordan. "It will be more nonstop flights. It will improve the reliability and the resilience of our operation, especially during peak travel times."
On Thursday, the Austin City Council unanimously approved up to $5.5 million for Southwest, waiving parts of the city's usual rules for awarding such agreements.
Under the deal, the city will pay Southwest $2,750 for each Austin resident hired over five years. The money will come from city revenue such as property taxes and sales taxes, City Manager T.C. Broadnax said.
The city estimates the crew base would generate about $19.8 million per year in local tax revenue. That figure is based on assumptions about Southwest employees buying homes, shopping and frequenting bars and restaurants in Austin.
The state of Texas is providing Southwest another $14 million through the Texas Enterprise Fund, Gov. Abbott said, with $375,000 dedicated to hiring military veterans.
The combined $19.5 million should cover most of the cost of setting up the crew base in Austin, Southwest spokesperson Lynn Lunsford said. The airline will also build a training facility in Austin.
Southwest already had its sights set on expansion in Austin, having previously said it hopes to be the anchor tenant of ABIA's new concourse, set to open in the early 2030s with at least 20 additional gates. Southwest accounts for more than 40% of passenger traffic at ABIA, which is twice the share of second-place Delta.
When asked by KUT News if Southwest would have chosen Austin without the economic incentives, airline CEO Bob Jordan said the government subsidies "made this decision easy."
"Those decisions are always difficult because capital is scarce," Jordan said. "But Austin has always been at the top of the list."
The city's payments to Southwest would be made annually if the airline meets targets under the agreement. Funding must be approved by the City Council each year.
City staff estimate the expansion would result in about 2,000 Southwest jobs in Austin. Most of the jobs would be unionized with an average wage of roughly $180,000.
"We have close to 1,500 members that live in the Greater Austin area and this is life changing for them," union representative Sam Wilkins said. "They are no longer going to have to commute to work or commute home after they've flown a trip." Wilkins said her Austin-area members would regularly have to drive or fly to Houston or Dallas to start their shifts.
To approve the deal, the city council passed an ordinance waiving parts of Austin's business incentive rules, which are meant to standardize how the agreements are awarded. City staff said the waiver was necessary because the project was unique and "does not fit the templates envisioned in the guidelines."
Because the project will be built on city-owned land, it will not generate property tax revenue. So Southwest will donate 10% of each incentive payment to the city's new Childcare Assistance Reserve Fund. The airline has also committed to expanding workforce training and aviation education programs in the Austin area.
