chicagoChicago airlines nearing billion deal to dramatically expand OHare Chicago Tribune

chicagoChicago airlines nearing billion deal to dramatically expand OHare Chicago TribuneWhile the new concourses will march westward from the existing Terminal , Daleys OHare Modernization Plan called for the construction of a western terminal on the airfields r edge. That required Daley to acquire hundreds of acres of land from suburban Elk Grove Village and Bensenville.

The nonhub airlines get their own space in Terminal , their own entrance, their own hotel, more club room, more paid space, they will be closer to the city. They love that, said a source miliar with the negotiations who was not authorized to speak about them publicly. And American and United essentially get a better internationally connecting complex, because to send passengers over to or from Terminal is a pain in the ass. Nobody likes that.

Under the new lease the city is negotiating, the airlines unilateral veto power over projects will disappear, Evans said. So, too, will United and Americans right to socalled exclusiveuse gates, which stay in their possession no matter how much theyre using them.

United will add one gate to an existing concourse later this year. American will open five more gates on Terminal s L concourse. A million Terminal extension is underway, withnine new gatesplanned in addition to the current .

The eightyear plan would be the single largest and most expensive terminal revamp in OHares year history. The goal is to vault the airline hub long known for its gridlock and delays into the st century by growing its sluggish number of international flights and creating more room for its domestic carriers.

Under the potential deal with the airlines, one of the major steps would be to build an expensive pedestrian tunnel westward from whats now Terminal . Evans declined to offer a cost estimate for that work.

All told, more than . million square feet of terminal space would be added a percent increase over the current . million square feet.

In addition to the two new satellite concourses and global terminal, the expansion would include a new western parking and security screening cility for airline employees, a Terminal parking garage and three new baggage systems considered key to the airlines support of the expansive project.

This is a very, very big deal and it is a good big deal, not a bad big deal, Harteveldt said. This assures Chicago will remain a premier hub in the U.S. This protects that position, and its not just about it being a point of pride for Chicago it really needed to be done.

When you look at the international numbers, you say, Wait a minute. We have half the international passengers that Miami and LAX do? We have a third the number of JFK? Evans said of New Yorks largest airport. We have more industry, more global trade, more imports from China than LA and Miami, why should Chicago be half? Were at or million international passengers and theyre at or million. Really? Come on.

That old runway blocked off acres of valuable real estate that we couldnt use, Evans said, pointing to one of several maps spread out on a conference room le in her th floor Loop office. Now, when we get rid of it, we have something that no other airport in North America has more than acres of developable land.

A new western terminal, paired with new western highway access to OHare, would generate economic development opportunities for the nearby suburbs, the city argued at that time. The highway portion is still being built, but the lack of a new western terminal means suburban officials arent likely to see the of economic development they hoped for, at least for now.

Im sure United and American are going to try to make a land grab and gobble up as many gates as they can possibly get, Harteveldt said. Its really going to be up to the Chicago Department of Aviation to be the advocate for the nonhub airline, both U.S. and foreign flag, to ensure those carriers have adequate access and adequate number of gates. Its in the airports best interest to limit United and American.

For more than a year, Evans and her team have been at the negotiating le trying to strike a deal that finally would substantially boost OHares gates. Evans and Emanuels office declined to discuss specifics of the talks, including how much the airlines are willing to pay for the improvements. But a memo from airline negotiators to city officials obtained by the Tribune through an open records request shows that airline executives have signed off on a price tag between billion and billion.

We look forward to continuing to work collaboratively in order to finalize an agreement that will mean continued investment at OHare and a worldclass airport for the traveling public and people of Chicago, United spokesman Charlie Hobart said.

TheFederal Aviation Administrationnow prohibits such arrangements in new leases at airports that receive federal funding, noting that the practice locked up gates and allowed airlines to restrict competition and access to a market by other carriers. Under the new OHare lease, which is expected to span years, the city will annually evaluate how often airlines are using gates and reallocate them based on use, Evans said.

There comes a time where you just cant live in your grandmothers terminal anymore, and truthfully, were living in our grandmothers terminal, Evans said. You snooze, you lose in this business. Our competitors are out there investing, adding capacity, and we have got to do the same.

Plus, its a big win for the airlines, which save money with ster connection times and can offer a more seamless travel experience for customers, Evans said. City Hall predicts the moves should drive a steady increase in the citys total number of passengers, from million in to around million by .

While OHare consistently is listed as one of the worlds bestconnected and busiest airports, Evans said those rankings lean heavily on Chicagos large number of regional jets and have provided the city with a lse sense of security. She said Chicagos ilure to add gates at OHare during the last quarter century has left it vulnerable to competition, noting thatLos Angeles International Airportpassed OHare last year in the number of passengers, moving into the No. spot behind HartsfieldJackson Atlanta International Airport.

The city spent about . billion including . billion from the federal government to seize the land and build three new parallel eastwest runways and extend a fourth existing one, bringing the number of eastwest runways to five. The last of those runways was only built after thenPresident Barack Obamas administration ponied up an extra million and, along with City Hall, convinced United and American to drop a lawsuit that sought to block Daley from borrowing for further construction.

In the airline industry, having domestic and international airlines in the same terminal is known as a global alliance hub, Evans said, pointing to LondonsHeathrow Airportand Tokyos Narita International Airport as the standard. OHare would become the first such global alliance hub in the U.S., Evans said.

Emanuel declined an interview for this story. Privately, however, he has told business leaders and confidants that the OHare overhaul would be a game changer for Chicago, a move he has predicted could become one of his top achievements as mayor.

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My ultimate goal is to get the airlines to rethink Chicago in their system, rethink how they use OHare. Quite frankly, were after that international service. Thats what we need and thats what we deserve, Evans said. And if we make it really customer friendly, the airlines can sell the heck out of it.

Representatives for United and American declined to comment Sunday on the projects price, scope or details, citing ongoing negotiations between the carriers and the city.

If Emanuels administration and the airlines ink a deal, the massive expansion will change the look, feel and operations at OHare.

If the airlines sign off, the deal would represent a landmark breakthrough at OHare, where American and United long have held great control over the airports operations, often refusing to go along with muchhyped plans for additional gates, concourses or a new terminal. The two industry giants viewed those projects as the city charging them to pay for changes that largely would benefit their smaller competitors.

While United and American have declined to discuss the projects cost, the two airlines sent an August memo to Evans indicating they backed the city spending up to billion on the OHare overhaul. The Tribune obtained the memo through aFreedom of Information Actrequest.

The biggest operational change OHare no longer will have just a single international terminal.

Over the last two decades, OHare has not made any major upgrades to its international terminal while airports in New York, Miami, San Francisco, Los Angeles, Dallas and Atlanta spent a combined billion on international terminals, according to Aviation Department figures. In the case to the airlines for expansion, Evans pointed to Chicagos international passenger numbers remaining virtually flat over those years while business at five of those other airports grew by to percent each year.

Emanuel secured million from the Obama administration for the runway, which Evans said was a critical step toward the multibilliondollar OHare expansion now being finalized. The sixth eastwest runway allows OHare to shut down a second diagonal runway on the airfields west end, clearing room for construction of the larger global terminal and two satellite concourses, Evans said.

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In January , Emanuelrebooted the airport expansion planswith a program he dubbed OHare . His first announcement was a . billion deal to build OHares sixth and final eastwest runway, deicing pads to allow planes to take off more quickly and new taxiways to speed up the pace of planes going to and from rflung gates. The new runway is expected to open in while the deicing pads will go into operation this year, city officials said.

A United representative would not comment on specifics of the project or the negotiations, but expressed optimism of reaching a final deal with the city.

One airline wont want money they pay to fix something that helps another airline. Even though its childish, they play games, another city official miliar with the airports operations said of the two hub airlines. That has really caused OHare to be underinvested in over the course of decades.

Evans said the airlines have agreed in principle to the new hotels, but plans wont be finalized until later this year when more cost estimates are completed.

A major capital program is needed to maintain and refresh existing cilities and support growth atORD, wrote Michael Minerva, Americans vice president of government and airport afirs. The hub airlines proposal is in line with the citys stated investment target of billion.

Meanwhile, the Global Terminal would be home to the two hub airlines and their international partners. For United, that means being located side by side with its Star Alliance partners, including Lufthansa and All Nippon Airlines. For American, that means easy connections with One World partners British Airways and Japan Airlines.

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To pay for it, the city would issue bonds backed by future higher fees the airlines will be charged under a new OHare lease. Evans said taxpayer money would not be used and travelers should not see an increase in aire since airlines are global companies that absorb lease increases and other fee changes.

Beyond the additional gates, other gates in Terminal would be torn down and replaced with new ones.

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It is enormously important not to let this very old lease which is definitely the strongest airline control lease in the national system continue, Evans said. It just was not in the citys interest to let that kind of extreme airline control continue. … In , they gave away the store, gave away the rm.

Some of the terminals at OHare date back to the dawn of the jet age, said Henry Harteveldt, a San Franciscobased travel industry analyst and president of Atmosphere Research Group. The concourses choke. Good God. If youre at OHare at rush hour, even on a good day, it resembles one of the circles of hell. The city, the passengers flying to and through OHare and the airlines serving the airport all deserve a lot better, and theyre going to get it.

Emanuel is seeking to leverage the May expiration date of the airlines year lease to secure higher fees and charges from the carriers that would help bankroll the ambitious project. The Aviation Department would borrow against the future airline fees to pay for the construction, which city officials said would not require taxpayer dollars.

Harteveldt, the travel analyst, said United and American have enjoyed dominance over the airport, and it will be best for consumers if city airline officials use the expansion as an opportunity to open up more gates for other domestic and international carriers. He noted that Virgin and Spirit airlines both previously have complained about not being able to get more gate access at OHare.

Its good to be first when its the right thing to do, and this seems to be the right thing to do, Burke said. Other airports will be looking at what Chicago is able to accomplish, because if youre a large airport hub and you want to grow your international traffic, you want to work with your airlines to make sure the customer experience is a great one.

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They price on demand. Fuel prices will have a lot bigger impact on ticket prices than rent, said Evans, who added that airport costs are about to percent of an airlines total operating costs.

So, in the end, American, United and the other nonhub airlines all agreed, the source said. It gives everyone sort of what they want.

Evans points to the new western employee garage as a commitment to keep building gates and concourses in that direction. The citys longterm planning calls for the addition of Satellite and Satellite concourses and the construction of a new western terminal, but those cilities are likely to years off into the future, according to a City Hall source miliar with the plans.

My boss, the mayor, has this thing I dont just want OHare to be bigger, it has to be the best, and this is one of the ways were going to leapfrog over the other U.S. international terminals, Evans said.

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The yearold Terminal would be torn down to make way for a new Global Terminal with wider concourses and gates to accommodate the larger aircraft that embark on international flights to places like Hong Kong and Dubai. Terminals , and would be renovated, while two new satellite concourses would be constructed to the west of the existing terminals and connected to the new Global Terminal by an underground pedestrian tunnel.

Terminal would welcome Delta and other spoke carriers at OHare, and theyll share the terminal with several international carriers, many of whom have partnerships with Delta. A Delta representative declined to comment Sunday.

A project of this scale also could be a reputation changer for OHare, which for years ranked among the worst for ontime arrivals and departures, leaving thousands of travelers with their own unique tales of lengthy Chicago delays and canceled flights.

United and Americans stranglehold over OHare and their frequent infighting often ground improvements or investments to a halt, city officials have said. One mous example took place eight years ago, Evans said, when a security checkpoint had to be shut down because a roof on Uniteds terminal was leaking.

The city and airline carriers are negotiating an . billion deal to vault OHare into the st century with a stateoftheart global terminal and dozens of new gates. More than million square feet would be added a percent increase. Phil Geib and Bill Ruthhart / Chicago Tribune

New concourses would be feet wide, dramatically larger than current ones. Terminals , and would get architectural upgrades. Passenger amenities would get a boost, with United and American opening ,squarefoot club lounges in the new Global Terminal.

In the coveted category of international passengers, Chicago lags even further behind.

While that practice might foster more competition, United and American will remain as the undisputed heavyweights at OHare, with plenty of say over the details of how the airport expansion is planned and constructed. As such, the two airlines are receiving preferential treatment and placement at the new cilities included in the plan, city officials stressed. United, Emanuel often notes, is Chicagos largest private sector employer.

The city and airline carriers are negotiating an . billion deal to vault OHare into the st century with a stateoftheart global terminal and dozens of new gates. More than million square feet would be added a percent increase. Phil Geib and Bill Ruthhart / Chicago Tribune

One of the reasons they could kill the project The year lease agreement theyve been operating under gives the two hub airlines veto power over virtually every decision and project at the airport that isnt considered vital to safety or security, Evans said.

So in , thenMayorRichard M. Daleyembarked on what became known as the OHare Modernization Program. The effort included using eminent domain to acquire acres while razing more than homes and commercial buildings and forcing the relocation of a Bensenville cemetery.

People know from traveling around the country, if Chicago is clogged, the rest of the country gets clogged. If they dont have enough gates for aircraft, the rest of the country suffers for it, Burke said. So, when I see a project like this going off at OHare, it is good for the entire U.S. airport system.

The airlines incentive for the big spending? More business and better customer service.

Given OHares place in the airport system and their place is an enormous one the ct they havent been able to increase their gates in years has been important, said Kevin M. Burke, president and CEO of the Airports Council International North America, an organization that represents airport governing bodies.

Two new concourses currently dubbed Satellite and Satellite also would be built. Satellite would connect to Terminal , while Satellite would be built rther west, according to city plans provided to the Tribune.

American spokeswoman Leslie Scott said the airline looked forward to sharing the details about our opportunities to grow in Chicago once the negotiations are completed.

Not included yet are three new hotel projects at the airport the renovation of the existing Hilton, along with a new hotel at Terminal and another new hotel to be built at a multimodal cility with rental cars, buses and parking thats under construction.

Adding new gates at OHare to expand the airports passenger capacity has been bandied aboutCity Hallfor at least two decades. For much of that time, it didnt amount to much more than talk. The airport had been hamstrung by its archaic layout of six intersecting runways. Even if OHare added gates, the airfield and runways couldnt handle the increase in flights because of the timing delays involved with alternating takeoffs and landings on the crisscrossing runways.

The gate western terminal Daley proposed was mothballed long before Emanuel took office, thanks to the power of United and American. The two hub airlines opposed the concept, arguing that they paid the majority of the fees at the airport and their money would go to build a terminal that would only benefit their competitors.

Under Emanuel and Evans, the city has changed its approach to adding gates and a new terminal at OHare.

MayorRahm Emanueland Chicagos airline carriers are in the final stages of negotiating a blockbuster . billion deal to dramatically expand OHare International Airport with a stateoftheart global terminal, dozens of new gates and several additional concourses, the Chicago Tribune has learned.

When the airfield construction is completed, OHare will operate six eastwest runways and two diagonal runways. As the added runway capacity ramps up, dozens of new gates will come online over the next eight years, according to the citys latest plans.

Security systems had to be covered with tarps after American repeatedly had shot down requests to repair the roof, arguing United should have to cover the entirety of the expense because of poor architectural design, she said.

As the new concourses and gates are built, flights that arrive and depart from Terminal would be relocated to the satellite concourses and an expanded Terminal . That would clear the way to tear down the aging Terminal without hindering the airports overall capacity and operations, Evans said. The details of exactly which airlines move, in what order and to where is still the subject of intense negotiations, city officials said.

When people bug me about the western terminal, I say, you dont build the rthest gates first, Evans said. You have to build into it. Well get there, and well absolutely need that.

However the inidual airlines will benefit, Harteveldt predicted the expansion would be a major driver of new jobs, more flights and increased tourism for years to come.

United and American, for example, would be located in the Global Terminal with major international partners Lufthansa, All Nippon Airways, British Airways and Japan Airlines. Some spoke carriers like Delta, for example, would relocate to whats now international Terminal , where customers easily could connect to KLM, Air France, Korean Air and Aeromexico.

The deal would cover . billion worth of improvements at OHare, according to sources miliar with the projects details who were not authorized to speak publicly. Once finalized, Emanuel is expected to introduce the agreement at Wednesdays City Council meeting.

Burke, the airports council CEO, said becoming the nations first global alliance hub would be a significant coup for OHare, especially given that the nations domestic travel in recent years has been relatively flat, with much of the growth coming from international flights.

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The amount of space for planes to park at airline gates would increase by percent, and the total number of gates would jump from today to roughly upon the projects completion in , Aviation Commissioner Ginger Evans confirmed in an exclusive interview with the Tribune.

That practice, city officials argue, left OHare lling behind nationally.


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