Airlines back O'Hare plan

September 24, 2000

BY FRAN SPIELMAN AND ROBERT C. HERGUTH STAFF REPORTERS

Mayor Daley's insistence that United and American airlines continue to share dominance of O'Hare Airport equally provided the framework for a deal that finally may get his $3.2 billion terminal expansion plan off the ground.

American signed on to the mayor's so-called World Gateway plan after City Hall agreed to pick up more of the tab and make other changes, sources told the Chicago Sun-Times. And United has a deal that should be finalized within a week, the sources said.

Reacting Saturday to the Sun-Times article description of the deal, Daley conceded, "There's an understanding" with the airlines, though he declined to elaborate.

The agreements virtually ensure that the ambitious project will move ahead largely as Daley outlined during his 1999 re-election campaign. It also guarantees the airport's two biggest carriers, which control more than 80 percent of O'Hare's operations, will remain on equal footing.

That was a crucial element to the mayor, sources said, noting that each carrier tried to get a leg up on the other during talks.

"The most critical thing is the fact that the way the deal is structured, they retain their relative market share, so the growth for United is the same as the growth for American," a City Hall source said. With airlines accused of monopolistic pricing practices, the source added: "Chicago has competition, both at O'Hare and Midway. . . . World Gateway retains that competitive environment."

During often contentious negotiations, the city agreed to: dedicate an undisclosed amount of additional airline passenger tax revenue to the project, lessening the burden on airlines; sell United another 50 acres of property near its planned headquarters on the military side of O'Hare at below market rate, and phase in part of the work, though the initiative could still be completed by the original target of 2008.

The city's decision to devote more ticket tax revenue to World Gateway means there will be less money for other airport projects such as soundproofing.

Daley vowed that soundproofing will not be among the projects cut.

"All that will still go on--the soundproofing," he said Saturday.

The project's costs may force the city to raise ticket taxes from $3 a ticket to $4.50 a ticket, the maximum allowed under federal law. However, City Hall officials said as recently as last week that no decision had been made on whether to seek the full increase.

In return for the city concessions, the two carriers have agreed to give up exclusive control over gates.

Each would get eight "preferential" gates in the new terminals. But they wouldn't keep them if they didn't use them, and four other gates would be opened to other airlines, sources said.

"We're not going to sit there with an empty gate because somebody owns it," said a source. "You use it or you lose it."

United plans to move its Elk Grove Township headquarters to the land once occupied by the military at O'Hare. The 50 acres would be sold to the airline for use either by United or one of its suppliers in a campus setting.

United spokesman Joe Hopkins declined to comment on the project, except to say the airline "is optimistic we will reach agreement in short order."

World Gateway calls for two new terminals, reconstructing parts of others and adding at least 20 gates and two inspection facilities. Airline leaders initially balked at the price tag for the project because, without runways, it would do nothing to increase capacity. At one point, they discussed scaling back the improvements.

O'Hare opponents Saturday denounced the news that the city is finalizing agreements to move forward with the Gateway plan. The Suburban O'Hare Commission welcomed the news that Illinois Attorney General Jim Ryan is joining its 1995 suit in DuPage County Circuit Court to block new development at O'Hare.

Daley dismissed the importance of Ryan joining the suit by shrugging his shoulders and saying, "He needs to represent DuPage County."

Ryan was DuPage state's attorney before being elected state attorney general five years ago.

No decision has been made on the costly plan to relocate the heating and cooling plant to make way for a new Terminal 4.

Instead, the project will be phased in, with a Terminal 6 and extended concourses built first, sources said.