Houston: You Blew It on United Hub

HOUSTON (TheStreet) -- Houston, you blew it. You killed the goose that laid the golden egg.

Aesop's fable, written in the sixth century B.C., tells of a couple that had a goose that laid golden eggs. Thinking they could get more gold more quickly, the couple killed the goose and cut it open. But they found no more eggs. The fable has stood for 2,400 years as a tale of being rich, wanting to be richer, and losing everything in that pursuit.

This ancient lesson, unfortunately, was lost on Houston's city council, which voted 16-1 last month to enable Southwest (LUV) to build an international terminal at Houston Hobby Airport, diminishing United's (UAL) hub at Houston Bush Intercontinental. There United operates the third biggest U.S. hub, with 650 daily departures to 177 destinations including 64 international destinations.

United's Houston hub is also the third most profitable major airline operation in the country in terms of profit margin, according to Scott Kirby, president of US Airways (LCC) . The golden egg is the vast benefit it brings to Houston's economy. In a global world, cities have few assets more important than international airports with the reach to drive global commerce.

As John Kasarda, professor at the Kenan-Flagler Business School at the University of North Carolina, has said, in the 18th century the great cities were ports. In the 19th century, the great cities were railroad cities. In the 20th, they were cities with good highway access. In the 21st century, they are cities with non-stop international flights.

What misled the Houston council? First, it is far too easy to argue that competition is wonderful and solves every problem and government should never stand in the way. Also, the 2010 merger between United and Continental bred resentment because the hometown carrier closed its Houston headquarters. And who can resist the promise of lower fares to Mexico City and Cancun and San Jose del Cabo and the engaging charm of Southwest CEO Gary Kelly?

On top of all that, Southwest reversed an earlier position to say it would pay for the needed improvements at Hobby. Free money! If only life were so simple.