O'Hare Airport expansion headed for a crash landing

Studio Gang's rendering of new Terminal 2, the “global terminal,” at O’Hare Airport.

Studio Gang’s rendering of new Terminal 2, the “global terminal,” at O’Hare Airport.

Even though the airline industry is heading for a crash landing thanks to the coronavirus pandemic, the city of Chicago, with typical aplomb promises that the $8.7 billion Taj Mahal O’Hare Expansion project is taking off as scheduled.

Apparently not noticing that United and American airlines–the duopoly that runs O’Hare–and other airlines are losing tens of millions dollars a day, angling to save themselves with billions of dollars of emergency federal aid and flying near empty planes, Matt McGrath, deputy commissioner at the city’s Aviation Department, pledges that, We plan to move forward with these important investments to secure O’Hare’s future in a fiscally sustainable and responsible manner.”

Fiscally sustainable and responsible?

It’s hard to see how United and America is ready to jump in to be the chief funder of  the lavish terminal and other projects in the plan. Apparently Chicago has a perfectly focused future scope and sees rosy a path ahead for the aviation industry when so many people who are in it are scared to death. Consider: “United Airlines says coronavirus pandemic is worst crisis ‘in the history of aviation’” And Warren Buffett has dumped all of his stocks in the four major airlines, saying the industry and the world have change.

In the face of reality, from the city flows the same eyewash about O’Hare expansion that it first applied ever since the early 2000s when Mayor Richard M. Daley unveiled the O’Hare Modernization Project with promises of deep cuts in delays and towering increases in capacity. The OMP was complete overkill, having in all those years experienced billions of dollars in cost overruns, blown schedules and vast stretches of new runways that never come close to the improvements that Daley promised.

Now arriving is the new the $2.2 billion Global Terminal — the project’s centerpiece — and other “improvements,” that with added new gates is designed to fix the original fix–the OMP.

As the Sun-Times reported:

Henry Harteveldt, a travel industry analyst for San Francisco-based Atmosphere Research Group, said the O’Hare work needs to be scaled back, delayed, and possibly completed “in stages.” He also said the city may have to renegotiate airline use and lease agreements —with higher terminal rents and landing fees baked in — that bankrolled the $4 billion in general airport revenue and passenger facility charge bonds authorized by the City Council to get the project started.

“This isn’t the time to build a Taj Mahal. If any airline reaches even half the level of passengers and half the level of revenue that it had before the pandemic by the end of this year, it would be a miracle,” Harteveldt said…

He advised the city and major airlines to “sit down with the architect and the contractors and re-think” the entire project. Consider holding off for “at least a year or two,” then building it in stages, so they’re not “over-building” at a time when airlines finances are weak.

And, above all, find a way to “re-think the rent or lease obligations” to recognize the “much weaker financial condition” the airlines will be in “for the next two-to-three years at least,” Harteveldt said.

“If the city proceeds with this without consulting with the airlines, it’s very possible the airlines will simply say, ‘We’re reneging on this new terminal. We can’t afford it. Forecasts say we no longer need it. And we don’t support it,’” Harteveldt said.

Here’s the rub. Chicagoans elected a new mayor, Lori Lightfoot, because they were sick and tired of City Haul’s way of doing things. Will she casually accept the guff that throwing money into the bottomless hole that is O’Hare Airport is a legitimate “longterm investment.”

Or will she place good public policy above the self-interest, self-perpetuating “improvements” that grease the wheels of politically connected insiders, contractors public employee unions and others who directly  benefit from the O’Hare perpetual motion machine?

Ahead awaits Lightfoot’s test of whether she’s a true reformer.

dennis@dennisbyrne.net

www.dennisbyrne.net 

My historical novel: Madness: The War of 1812

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  • Please comment on how the virus affects the Peotone boondoggle. If cutbacks in the airline industry affects O’Hare expansion, where is the need for Peotone, a white elephant? How much $$$ has already been put down that hole?

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    In reply to Get out of IL now!:

    I was thinking the same thing! With Illinois in dept beyond imaginable why isn't the Gov selling all that land they bought years ago for this boondoggle?

  • In reply to Get out of IL now!:

    Even prior to this pandemic the odds that Peotone would be built are about zero. Rather, I should say that it could have been built but it would have had zero traffic as the major airlines are too invested in ORD. The only way it could have made it would be if the FAA allowed foreign carriers to carry domestic pax point to point in the US, which it never would due to the domestic carriers push back.

  • In reply to Richard Davis:

    Maybe a little history is in order. While so many people bought wholesale Richie Daley's (keep-the-contract-money-flowing from-O'Hare) false assertion that the South Suburban Airport would be a white elephant, two international airport builders/developers of big public works projects had lined up to plan, finance, build and operate the airport. Another had previously expressed interest in it, but because it did business with the city, including at O'Hare, it was forced to drop out of contention. Unlike the O'Hare boondoggle, the SSA would have been built in stages, as demand justified it. Expert studies had demonstrated the need for a third major airport in the Chicago area to keep it competitive because they had concluded that O'Hare was too constrained to expand to effectively handle additional traffic without creating even worse delays. That prediction has turned out to be correct, thus the need for another $8 billion "investment" that promises the same kind of unrealistic hope.

    As to the argument that the current aviation industry crisis eliminates the need for a third airport: Perhaps you missed the news that the Southland has become a major site for warehouse location, situated as it is at the intersection of major land (highway and rail) transportation arteries. Whatever the outlook for SSA as a passenger airport (never mind that more than 2 million people live within a reasonable drive of the SSA), its potential as a cargo airport is large. (Check out Memphis, the Fed Ex hub.)

    The politically inspired effort to kill the SSA is a perfect example of the Chicago Way style of self-serving corruption. "Make no little plans" is supposed to be a part of Chicago's DNA. To bow to the special interests, the slogan now is "Make No Plans."

  • The city is counting on the airlines to help fund the expansion. But with flights canceled, jets grounded and passenger traffic plummeting because of the coronavirus, the airlines face their most severe economic crisis since the Sept McDVOICE

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