Houston Mayor Annise Parker is throwing her support to a $100 million expansion of the city's Hobby Airport that would enable Southwest Airlines to accommodate international flights.
Parker and Southwest officials announced the deal Wednesday at Hobby, the smaller of Houston's two major airports.
Southwest has agreed to pay $100 million for the five-gate expansion that would allow them to provide international flights, the Houston Chronicle reports.
Houston Airport Director Mario Diaz earlier suggested that a facility fee could be used to pay for the expansion, but the airline has agreed to pay for the project.
Dallas-based Southwest would use four of the gates, while the fifth would be open to other carriers, the paper reported.
The Houston City Council still must approve the agreement.
If approved, Southwest has said it could begin flying from Houston to Mexico and Latin America in 2015.
"Houston has suffered from monopoly airfares to Mexico, Central American, Caribbean and South America long enough," said Gary Kelly, the airline's president and CEO. "We will bring lower fares. We will bring more competition."
Mike Davis, a professor at Southern Methodist University's Cox School of Business, said an expansion in Houston would also increase competition in North Texas when the new terminal at Dallas Love Field is complete.
The option to fly internationally on another carrier from Houston could affect prices in Dallas-Fort Worth, he said.
"Even a little bit of competition is often hard to deal with, because it always results in price wars, which will make it harder for American [Airlines], which also services Latin America," Davis said.
United Airlines, which has a hub at Bush Intercontinental Airport, opposes the Southwest plan, saying it would lead to layoffs at the larger airport.
NBC 5's Ray Villeda contributed to this report.