Hopeful
Veteran
- Dec 21, 2002
- 5,998
- 347
If AA & UAL can afford $14 billion to build a runway, they can afford to pay their workers decent raises.
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UAL, American offer to fund O'Hare runway work, but at a price
By John Pletz and Greg Hinz
Dec. 17, 2008
(Crain's) — The two largest airlines at O'Hare International Airport told the city they're ready to support construction of additional runways, but they want to extend a deal that allows them to maintain control of the majority of airport gates.
United and American in September sent the city a letter outlining a proposal under which they'd be willing to finance the completion of the previously estimated $14-billion expansion of O'Hare, according to sources who read the letter.
In it, the airlines offer to commit to funding to complete runways, but there's no mention of a new terminal the city also wants to build on O'Hare's west end. The airlines also seek to extend the master use agreement, which runs through 2018, that specifies what rights the carriers have to gates at O'Hare and how much they have to pay for them.
It's unclear whether the city has responded to the airlines' offer. But it will test Mayor Richard M. Daley's resolve to complete the O'Hare project with his desire to bring more carriers and competition to the airport.
The city still wants to push ahead with the terminal, even if the airlines won't fund it, sources say, though it's unclear from where funding will come. The city wants the terminal for future growth and to attract more carriers to the airport.
The city is trying to increase the number of shared-use gates, allowing it to control which airlines use them throughout the day. Airlines historically paid for terminal construction and expansion, allowing them to keep other airlines from using their gates, even when they are idle.
The airlines hold the key to the O'Hare expansion because they must agree to pay higher landing fees and rents that would repay the debt needed to finance the project.
In the letter, which the city confirms but declines to release, the airlines take a more conciliatory tone than in a June 6 letter in which they balked at planning for the next stage of the airport expansion because of then-record fuel prices and carrier cutbacks.
The city and the airlines decline to comment on the letter. Privately, the airlines and city officials say they're optimistic that they'll reach a deal soon, perhaps early next year, to go ahead with the project.
United CEO Glenn Tilton said last month after opening the new runway built as part of Phase One that he was confident a deal would get done. He declined to speculate how soon.
"As long as we're talking, I have no worries," he said. "We're talking."
The airlines want additional runways that would improve the efficiency of O'Hare, which remains one of the country's most delay-prone airports, costing the carriers money. They are banking on future growth in air travel.
But they also have an interest in maintaining their dominance at the airport and don't want to pay for a terminal that would be used by competitors. The airlines want to extend the use agreement, which expires in 2018, or about four years after the city's target date to complete the expansion.
However, they question the need for a new terminal at a time when airlines are cutting back schedules. The city wants to attract more airlines to increase competition, passengers and revenue. Last week, Virgin America announced service from Boston to California instead of Chicago because it was unable to get gates at O'Hare.
(Reporter Paul Merrion contributed to this story.)
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UAL, American offer to fund O'Hare runway work, but at a price
By John Pletz and Greg Hinz
Dec. 17, 2008
(Crain's) — The two largest airlines at O'Hare International Airport told the city they're ready to support construction of additional runways, but they want to extend a deal that allows them to maintain control of the majority of airport gates.
United and American in September sent the city a letter outlining a proposal under which they'd be willing to finance the completion of the previously estimated $14-billion expansion of O'Hare, according to sources who read the letter.
In it, the airlines offer to commit to funding to complete runways, but there's no mention of a new terminal the city also wants to build on O'Hare's west end. The airlines also seek to extend the master use agreement, which runs through 2018, that specifies what rights the carriers have to gates at O'Hare and how much they have to pay for them.
It's unclear whether the city has responded to the airlines' offer. But it will test Mayor Richard M. Daley's resolve to complete the O'Hare project with his desire to bring more carriers and competition to the airport.
The city still wants to push ahead with the terminal, even if the airlines won't fund it, sources say, though it's unclear from where funding will come. The city wants the terminal for future growth and to attract more carriers to the airport.
The city is trying to increase the number of shared-use gates, allowing it to control which airlines use them throughout the day. Airlines historically paid for terminal construction and expansion, allowing them to keep other airlines from using their gates, even when they are idle.
The airlines hold the key to the O'Hare expansion because they must agree to pay higher landing fees and rents that would repay the debt needed to finance the project.
In the letter, which the city confirms but declines to release, the airlines take a more conciliatory tone than in a June 6 letter in which they balked at planning for the next stage of the airport expansion because of then-record fuel prices and carrier cutbacks.
The city and the airlines decline to comment on the letter. Privately, the airlines and city officials say they're optimistic that they'll reach a deal soon, perhaps early next year, to go ahead with the project.
United CEO Glenn Tilton said last month after opening the new runway built as part of Phase One that he was confident a deal would get done. He declined to speculate how soon.
"As long as we're talking, I have no worries," he said. "We're talking."
The airlines want additional runways that would improve the efficiency of O'Hare, which remains one of the country's most delay-prone airports, costing the carriers money. They are banking on future growth in air travel.
But they also have an interest in maintaining their dominance at the airport and don't want to pay for a terminal that would be used by competitors. The airlines want to extend the use agreement, which expires in 2018, or about four years after the city's target date to complete the expansion.
However, they question the need for a new terminal at a time when airlines are cutting back schedules. The city wants to attract more airlines to increase competition, passengers and revenue. Last week, Virgin America announced service from Boston to California instead of Chicago because it was unable to get gates at O'Hare.
(Reporter Paul Merrion contributed to this story.)
