Austin Weighs Incentives to Boost Southwest Airlines Expansion

Austin's Efforts to Attract Southwest Airlines Expansion

The city of Austin is making a strong push to attract Southwest Airlines to expand its operations within the capital city. This initiative has taken center stage as the city council prepares to vote on an incentive program for Southwest this week, specifically on Thursday. According to an agenda item first reported by KXAN, the council is considering whether to authorize the negotiation and execution of an economic development agreement with the Dallas-based airline.

The proposed agreement would involve a jobs-based award of $2,750 per job hired over a five-year term. This funding aims to support Southwest’s business expansion at Austin-Bergstrom International Airport. However, the financial support would be contingent upon performance and compliance evaluations, ensuring that the airline meets specific benchmarks.

City documents highlight that the expansion could bring increased staffing, gate activity, and aircraft availability to the Austin airport. The city hopes that these changes will result in improved schedule reliability, fewer cancellations, and more flight options for travelers. As Austin continues to grow, this investment is seen as crucial to keeping air service aligned with demand, supporting tourism and business travel, and enhancing the overall passenger experience.

Despite recent growth being at low levels, Austin recently lost its position among the top 10 most populous cities in the country. However, city documents indicate that Southwest has shown interest in expanding its operations in Austin. With multiple sites competing for the airline’s attention, the documents note that Southwest is evaluating state and local incentives alongside other cost drivers when making its decision.

If Southwest chooses Austin, the expansion project is expected to create approximately 2,000 new jobs with an average wage of around $180,000. Additionally, the company has committed to donating 10 percent of its incentives awards to the Childcare Assistance Reserve Fund, which supports childcare affordability and access for working families.

A fiscal impact analysis suggests that in addition to the direct jobs Southwest would add, the expansion would generate an additional 5,100 indirect local jobs across various sectors such as construction, transportation, food and hospitality services, and real estate. These jobs are projected to contribute $816 million in increased local output and $19.8 million in annual tax revenue to the local economy.

As a tenant of the Austin airport, Southwest will also be developing city-owned property at a capital expenditure estimate of $7.5 million, according to the documents.

Austin’s appeal to Southwest comes after the airline previously expressed interest in strengthening its presence in Central Texas. Earlier this fall, Southwest indicated its intention to become an "anchor tenant" of the airport's upcoming Concourse B and lease up to 18 gates in its new agreement, compared to the current 10.

If Southwest’s footprint in Austin grows, travelers can expect a different experience from the low-cost carrier. Southwest has shown interest in features such as lounges and more international routes. The airline is also preparing to transition to a new boarding process and assigned seating on its planes in late January.

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