CHICAGO (CBS) — American Airlines has announced its opposition to an $8.5 billion deal to expand the terminals at O’Hare International Airport, accusing the city of including a “secret provision” that would grant rival United Airlines extra gates.
Mayor Rahm Emanuel was expected to introduce the plan to the City Council on Wednesday, seeking approval to add dozens of gates at O’Hare by replacing Terminal 2 with a new Global Terminal with wider concourses, renovating the other three terminals, and adding two new satellite concourses.
The deal would be funded by higher fees charged to the major airlines, but in a statement released Wednesday morning, American Airlines said it would not sign the agreement as it currently stands, claiming the deal would undermine competition at O’Hare by granting United extra gates.
“American Airlines is excited about seeing O’Hare transformed into an airport that sets the global standard in airline passenger experience and efficient operations. And, after 18 months of multi-lateral, transparent negotiations, we were looking forward to supporting the new lease. But American cannot sign the lease in its current form because of a secret provision, inserted at the last minute, awarding additional gates to United.
“Today, Chicago is extraordinarily well positioned with three carriers operating hubs and competing aggressively against each other. However, the United gate deal would undermine competition, allowing the largest airline at O’Hare to expand its size advantage for years into the future. Thus, the United gate deal creates a clear winner, United, and clear losers: namely, competition, Chicago travelers and American Airlines.
“We would sign the lease if it did not include this provision. Alternatively, we are prepared to compromise. Indeed, since learning of the United gate deal less than two weeks ago, American has sought to re-level the playing field by urging the City to accelerate the construction of three additional gates, and award those to American. To date, the City has dismissed that approach without explanation. We encourage city leaders to fix the lease and ensure competition remains vibrant at O’Hare.”
Despite American’s objections, the mayor introduced the $8.5 billion expansion plan to the City Council on Wednesday.
“The plan being introduced to Council today ensures every airline has the chance to grow, but most importantly it ensures that O’Hare grows and that Chicago grows. This is about positioning Chicago to compete with Beijing, Paris and Abu Dhabi, not about positioning in the decades-old competition between two airlines. We are going to add more gates, build a new global terminal, improve runways and create 60,000 jobs in the process. That’s a win for Chicago, it’s a win for travelers and it’s a win for the airlines,” mayoral spokesman Adam Collins said in an email.
United Airlines called American’s claims “disingenuous.”
“This was not a secret deal reached at the last minute. Our agreement with the city for five additional gates was made more than 18 months ago in response to American’s deal with city for five additional gates. American has been aware of our agreement for over a year and has worked to block the implementation at every opportunity. As Chicago’s hometown airline, we are fully committed and excited about the opportunity to grow here in Chicago and make O’Hare a world-class airport.”
The airlines’ current 35-year lease at O’Hare is set to expire in May.
Under the proposed expansion plan, the number of gates at O’Hare would increase from 185 to 220, and 3.1 million square feet of new terminal space would be added – a 72 percent increase.
No taxpayer dollars would be used for the project.
Published reports state the city is seeking higher fees from major airlines like United and American as their current 35-year-lease is set to expire in May. The city would borrow against those future airline fees to pay for construction of the terminal overhaul.
The project also would include a new Customs and Border Patrol center and new TSA screening stations.
The expansion was presented Wednesday; it comes up for full discussion before City Council on March 28.
Construction would take eight years, with completion scheduled for 2026.