United Plays Cities for Incentives
News about merger talks between United and Continental airlines had cities clamoring to offer incentives to remain hubs of the consolidated airline.
Houston leaders said they were willing to match anything Chicago has to offer to keep the Continental headquarters in Houston rather than in Chicago, where United is based. And the Cleveland airport--a Continental hub--has considered waiving landing fees to "woo airlines."
But Chicago won out in the headquarters battle against Houston because of millions of dollars in incentives. The new airline recently leased 460,000 square feet in Willis Tower with the help of $35 million in city incentives and in 2006 the airline received $15.5 million to keep its Wacker Drive headquarters.
The Chicago Tribune tried to explain Houston's attempts to hold on to the airline headquarters:
The headquarters status is so important that Texas lawmakers petitioned the carriers to reconsider Houston as word of the merger talks spread. That's because taxes and spending generated by thousands of white-collar jobs can be a boost to revenue-starved city governments.
But what were the actual public benefits of these incentives deals? Sure the city got a guarantee of 325 jobs in the Wacker Drive office for 10 years at a cost of $15.5 million. But the 2,800 positions that will move to Willis Tower may not create many new jobs for residents of downtown Chicago, considering the jobs will just move from nearby Elk Grove Village.