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Chicago, airlines nearing $8.5 billion deal to dramatically expand O’Hare
February 28, 2018
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CHICAGO: Mayor Rahm Emanuel and Chicago’s airline carriers are in the final stages of negotiating a blockbuster $8.5 billion deal to dramatically expand O’Hare International Airport with a state-of-the-art global terminal, dozens of new gates and several additional concourses, the Chicago Tribune has learned.

The eight-year plan would be the single largest and most expensive terminal revamp in O’Hare’s 73-year history. The goal is to vault the airline hub long known for its gridlock and delays into the 21st century by growing its sluggish number of international flights and creating more room for its domestic carriers.

Emanuel is seeking to leverage the May expiration date of the airlines’ 35-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.

The 55-year-old Terminal 2 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 1, 3 and 5 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.

All told, more than 3.1 million square feet of terminal space would be added  a 72 per cent increase over the current 4.3 million square feet.

The amount of space for planes to park at airline gates would increase by 25 per cent, and the total number of gates would jump from 185 today to roughly 220 upon the project’s completion in 2026, Aviation Commissioner Ginger Evans confirmed in an exclusive interview with the Tribune.

“There comes a time where you just can’t live in your grandmother’s terminal anymore, and truthfully, we’re living in our grandmother’s 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.”

While O’Hare consistently is listed as one of the world’s best-connected and busiest airports, Evans said those rankings lean heavily on Chicago’s large number of regional jets and have provided the city with a false sense of security. She said Chicago’s failure to add gates at O’Hare during the last quarter century has left it vulnerable to competition, noting that Los Angeles International Airport passed O’Hare last year in the number of passengers, moving into the No. 2 spot behind Hartsfield-Jackson Atlanta International Airport.

Passengers

In the coveted category of international passengers, Chicago lags even further behind. “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 York’s largest airport. “We have more industry, more global trade, more imports from China than LA and Miami, why should Chicago be half? We’re at 10 or 11 million international passengers and they’re at 21 or 22 million. Really? Come on.”

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

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

“Given O’Hare’s place in the airport system and their place is an enormous one  the fact they haven’t been able to increase their gates in 24 years has been important,” said Kevin M. Burke, president and CEO of the Airports Council International North America, an organisation that represents airport governing bodies.

“People know from travelling around the country, if Chicago is clogged, the rest of the country gets clogged. If they don’t 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 O’Hare, it is good for the entire US airport system.”

The deal would cover $8.5 billion worth of improvements at O’Hare, according to sources familiar with the project’s details who were not authorized to speak publicly. Once finalised, Emanuel is expected to introduce the agreement at Wednesday’s City Council meeting.

For more than a year, Evans and her team have been at the negotiating table trying to strike a deal that finally would substantially boost O’Hare’s gates. Evans and Emanuel’s 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 $6 billion and $8 billion. Representatives for United and American declined to comment Sunday on the project’s price, scope or details, citing ongoing negotiations between the carriers and the city.

The airlines’ incentive for the big spending? More business and better customer service. 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 what’s now international Terminal 5, where customers easily could connect to KLM, Air France, Korean Air and Aeromexico.

“The non-hub airlines get their own space in Terminal 5, 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 familiar 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 5 is a pain in the ass. Nobody likes that. “So, in the end, American, United and the other non-hub airlines all agreed,” the source said. “It gives everyone sort of what they want.”

If the airlines sign off, the deal would represent a landmark breakthrough at O’Hare, where American and United long have held great control over the airport’s operations, often refusing to go along with much-hyped plans for additional gates, concourses or a new terminal.

Tribune News Service

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