Austin City Council has approved a significant economic development agreement with Southwest Airlines, aiming to create thousands of high-paying jobs and expand the carrier's operations at Austin-Bergstrom International Airport. The five-year deal provides up to $5.5 million in incentives to the airline in exchange for major employment growth in the Texas capital.
The partnership, finalized on December 11, 2025, solidifies Southwest's long-standing presence in the city, where it has operated for nearly half a century and currently handles over 40% of all passenger traffic. City officials project the agreement will generate nearly $12 million in new tax revenue, more than doubling the initial investment.
Key Takeaways
- Austin City Council approved a five-year economic agreement with Southwest Airlines.
- The city will provide up to $5.5 million in job-based incentives.
- The plan aims to create approximately 2,000 direct jobs with an average wage of $180,000.
- An additional 5,100 indirect jobs are expected in related sectors.
- The agreement includes a provision for Southwest to contribute to a local childcare fund.
Details of the Economic Partnership
The core of the agreement is a performance-based incentive program. The City of Austin will award Southwest Airlines $2,750 for each new job created within the city over the five-year term. This structure caps the city's potential payout at $5.5 million.
In return, Southwest is expected to create approximately 2,000 new direct employment positions. These roles are projected to have an average annual wage of around $180,000, bringing a significant influx of high-income jobs to the region.
According to documents presented to the city council, the airline had identified Austin as a key location for expansion. "As the company meets growth plans, it seeks to expand facilities and operations infrastructure to support new flight capacity and employment growth," the documents stated. This agreement helps secure that expansion within Austin.
By the Numbers
- $5.5 million: Maximum incentive payment from Austin to Southwest.
- $12 million: Estimated new tax revenue for the city.
- 2,000: Direct new jobs to be created by Southwest.
- $180,000: Average annual wage for the new positions.
- 40%: Share of Austin-Bergstrom passenger traffic handled by Southwest.
Broader Economic Impact on Austin
The benefits of the deal are expected to extend far beyond direct hiring. The city anticipates a ripple effect that will generate an additional 5,100 indirect jobs across various local industries. These include construction, transportation, food services, hospitality, healthcare, and manufacturing.
This expansion is designed to "solidify neighborhood employment centers and activity corridors," according to the city's official statements. By anchoring a major employer's growth, Austin aims to create a more stable and diverse economic base that supports a wide range of local businesses and services.
A Focus on Community Support
A notable provision within the agreement addresses a critical need for working families in Austin. Southwest has committed to donating 10% of its total hiring awards to a Childcare Assistance Reserve Fund. This contribution is intended to improve the affordability and accessibility of childcare for local residents, a key factor in supporting a growing workforce.
This community-focused element demonstrates a more holistic approach to economic development, recognizing that workforce growth is dependent on the availability of essential support services for families.
Southwest's Long History in Austin
Southwest Airlines began service in Austin nearly 50 years ago, growing from a regional carrier into the dominant airline at Austin-Bergstrom International Airport. Its deep roots in the community and its status as the most-used airline by Austinites make this partnership a natural step in its continued growth and investment in the Texas capital.
Strengthening a Key Hub
For Southwest Airlines, this agreement secures a strategic location for future growth. Austin has become an increasingly important city in its network, and this partnership provides the necessary framework to expand facilities and operational infrastructure.
The investment will support new flight capacity, allowing the airline to serve more destinations from Austin and accommodate rising passenger demand. This not only benefits the airline but also enhances the city's connectivity, making it a more attractive destination for both business and leisure travel.
"Southwest, on its mission to find a suitable site for the business expansion, has pinpointed Austin as a potential viable location." - Austin City Council Documents
The collaboration ensures that as Southwest grows, the Austin community grows with it. The creation of thousands of well-paying jobs and the indirect economic stimulus are expected to provide a substantial boost to the city's economy over the next five years and beyond, reinforcing the symbiotic relationship between the airline and its Texas home base.
