Chicago, airlines nearing deal to expand O’Hare

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 reported.

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 such as 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 percent increase over the current 4.3 million square feet.

The amount of space for planes to park at airline gates would increase by 25 percent, 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 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.

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.”

‘Game changer'

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 organization that represents airport governing bodies.

'People know from traveling 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 U.S. 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 finalized, 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 such as 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 ...

.”

Long on the runway

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.

The two industry giants viewed those projects as the city charging them to pay for changes that largely would benefit their smaller competitors.

Adding new gates at O'Hare to expand the airport's passenger capacity has been bandied about City Hall for at least two decades. For much of that time, it didn't amount to much more than talk.

The airport had been hamstrung by its archaic layout of six intersecting runways. Even if O'Hare added gates, the airfield and runways couldn't handle the increase in flights because of the timing delays involved with alternating takeoffs and landings on the crisscrossing runways.

So in 2001, then-Mayor Richard M. Daley embarked on what became known as the O'Hare Modernization Program. The effort included using eminent domain to acquire 400 acres while razing more than 500 homes and commercial buildings and forcing the relocation of a Bensenville cemetery.

The city spent nearly $10 billion - including $1.1 billion from the federal government - to seize the land and build three new parallel east-west runways and extend a fourth existing one, bringing the number of east-west runways to five.

The last of those runways was only built after then-President Barack Obama's administration ponied up an extra $155 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 January 2016, Emanuel rebooted the airport expansion plans with a program he dubbed 'O'Hare 21.” His first announcement was a $1.3 billion deal to build O'Hare's sixth and final east-west runway, de-icing pads to allow planes to take off more quickly and new taxiways to speed up the pace of planes going to and from far-flung gates.

The new runway is expected to open in 2020 while the de-icing pads will go into operation this year, city officials said.

Emanuel secured $345 million from the Obama administration for the runway, which Evans said was a critical step toward the multibillion-dollar O'Hare expansion now being finalized.

The sixth east-west runway allows O'Hare to shut down a second diagonal runway on the airfield's west end, clearing room for construction of the larger global terminal and two satellite concourses, Evans said.

'That old runway blocked off acres of valuable real estate that we couldn't use,” Evans said, pointing to one of several maps spread out on a conference room table in her 17th floor Loop office. 'Now, when we get rid of it, we have something that no other airport in North America has - more than 400 acres of developable land.”

When the airfield construction is completed, O'Hare will operate six east-west 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 city's latest plans.