Chicago Sun-Times
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O'Hare expansion deal made with American, United, city of Chicago

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By LYNN SWEET

Sun-Times Washington Bureau Chief

Last Modified: Mar 14, 2011 10:55AM

WASHINGTON -- The city of Chicago and the two main airlines at O'Hare Airport -- American and United -- have broken a deadlock that will allow the construction of a south runway, an aide to Sen. Dick Durbin (D-Ill.) said Monday.

Some aspects of the deal -- which was reached Saturday afternoon and is being announced later Monday morning at a news conference at O'Hare -- still need to be resolved.

At issue has been a serious dispute between the city and the two airlines over a deal to build new runways at O'Hare that at one time -- when airline traffic was much higher -- the airlines eagerly sought and for which they were willing to help pay 60 percent of the costs.

More recently, with business down, the airlines filed a lawsuit on Jan. 18 trying to block the city from going ahead with the expansion project without the approval of the airlines.

The Chicago Sun-Times has learned exclusively that. as part of the deal, the airlines will dismiss the lawsuit; in return, the airlines got a pledge that the city will negotiate -- not try to dictate -- construction of a north runway and other modernization projects. Chicago city officials agreed that a proposed Western Terminal Complex will be developed only as demand dictates. Talks on these projects are to begin no later than March 1, 2013.

The deal involving the city, the airlines and the federal government will allow $1.177 billion worth of construction to complete the south runway, one of two remaining projects of the massive expansion and modernization program.

The deal to break the stalemate was negotiated by Durbin, Mayor Daley and Transportation Secretary Ray LaHood, a former Illinois congressman. Sen. Mark Kirk (R-Ill.) was also involved. Durbin and Kirk met with the United's and American's chief executive officers -- Jeff Smisek and Gerard Arpey -- on Jan. 27.

Durbin asked LaHood last month to help resolved the dispute. A few weeks ago, on Feb. 9, LaHood hosted meetings at his Washington office with Daley and the airlines' CEOs.

Under the compromise, the city will kick in $365 million from passenger facility charges, and the airlines will contribute $300 million through their landing and rental fees. The city will use this revenue stream to back the issue general aviation revenue bonds.

LaHood cleared the way for the use of a portion of $410 million in the airport improvement program announced last year -- $175 million -- to be used for the south runway. The federal government will also kick in $155 million in new money for the O'Hare modernization.

LaHood called the deal "a landmark achievement that will benefit air travelers throughout the entire nation. Making improvements to O'Hare will not only reduce flight delays and improve service for air passengers across America, it will ensure one of our busiest airports continues to thrive economically in the future."

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Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

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This page contains a single entry by Lynn Sweet published on March 14, 2011 11:15 AM.

Obama at the 2011 Gridiron Club dinner. Transcript was the previous entry in this blog.

O'Hare expansion deal: Kirk, Durbin, LaHood, American, United statements is the next entry in this blog.

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