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American and United fight O’Hare expansion

24-Jan-2011

In an interesting conflict, American and United have filed suit against the City of Chicago in an attempt to halt the sale of bonds to finance the second phase of O’Hare’s expansion.

The project, which includes two new runways and the extension of a third, has a pricetag of USD3.36 billion. The carriers contend that their lease agreements allow them to disallow capital expenditures that are funded with general airport revenue bonds. The airlines fear that the additional expenditure would be passed on to them in the form of higher fees which both carriers cite as being unacceptable in the present economic climate.

While AA and UA supported the first phase of improvements that helped to reduce delays, they are unwilling to see their costs at the airport further elevated by additional expenditure.

This pits them against the city and its mayor, Richard Daley, who views the airport as a fundamental part of Chicago’s infrastructure and a driver of economic benefit. The city contends that the project is necessary for future growth and that any delay will ultimately affect the region’s economic wellbeing.

The dispute is interesting because the lack of new facilities and airport infrastructure limitations are seen as large components of costly delays, which the airlines themselves often cite as detrimental to their operations.

Consequently the carriers’ opposition to improvements at one of the nation’s primary hubs creates an interesting conundrum for the industry and its future.


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