ORD $8.5B Expansion Deal - Update: City Council Approved

airbazar · Wed Feb 28, 2018 9:51 pm

ILS28ORD wrote:
yeogeo wrote:
Delta spokesperson: "We are okay with the expansion — moving Delta to Terminal 5 gets us right next to SkyTeam partners, and that's a nice situation for us competitively in Chicago."

https://www.bizjournals.com/chicago/new ... j=80228051

I posted this link earlier today and it was completely ignored. Not that it supports the "building an ORD hub or focus city" theory others have floated but it may indicate delta seems to like the convenient placement in T5 with skyteam many here keep arguing doesn't matter.

Most people are not arguing that it doesn't matter. It matters from a economies of scale point of view. Only 1 lounge, shared ground services, lease agreements, etc.
What most people are saying is that DL and it's partners won't be using ORD as a hub and therefore we won't be seeing a lot of passengers transiting at ORD between SkyTeam partners.

ckfred · Wed Feb 28, 2018 10:05 pm

WA707atMSP wrote:
Before deregulation, here is how gates were allocated at ORD:

Concourse A: commuter airlines
Concourses B / C: International airlines + Pan Am + the international arrivals of TWA, Northwest, and American.
Concourse D: west half used by NW, east half used by EA, end gates used by CO
Concourses E / F: UA, with the tip of E used by Ozark
Concourse G: TWA, with the gate closest to the terminal used by AC
Concourse H: American and Lake Central / Allegheny closest to terminal, North Central in the middle, and Delta at the end
Concourse K: American

Concourses A, B, C, and D were torn down to make way for United's new terminal in the 1980s.

You're right about Concourses A, B, and C. D had EA, NW, CO, Allegheny, and Braniff had gates D1 and D2, which were located on the connector between Terminal 1 and Terminal 2.

UA had all of Concourse E. Ozark was on the tip of Concourse F.

G is correct. AC had gate G1. AA couldn't start the renovation of Concourse G until the late 90s, when AC moved out to be closer to Star Alliance partner UA.

H had AA with a couple of gates, H1 and H2. Chicago Helicopter used H1 or H2, although I think that business folded in the late 60s or early 70s. Southern Airways used H1 or H2. North Central had the odd gates, from H3 until just short of the very end. DL had the even gates from 4 to the end, plus a gate at the end of the odd side.

K has been all AA as long as I remember.

When the new Terminal 1 was built, A, B, and C, along with the old Terminal 1, was torn down. But, new Concourse B and C weren't built out to the south end, because D was still there. Once UA moved out of E and F, tenants on D moved over to E and/or F. Then, D was torn down, and B and C were finished.

ldvaviation · Wed Feb 28, 2018 10:13 pm

neomax wrote:
kngkyle wrote:
You bring up a good point. AA is in a bad spot in terms of leverage, especially with UA on the other side. UA is still king at ORD and the city knows it. The city is not going to lose if UA gets stronger and UA definitely isn't going to lose anything. It's really AA that stands to lose, and then you have the wild card-DL. DL is staying silent to avoid attracting attention, but there is no question they have plans in the wings. I can definitely see a situation where UA gains a stronghold and leaves AA to split the rest with a stronger Int'l Skyteam and Delta presence as a growing equal to AA. AA needs to fight a lot harder if they want to stay relevant in ORD. They're already trailing behind UA and could be in the rearview of DL if they don't act fast. The biggest mistake somebody can make in this industry is underestimate their competitor. They've already done it once with UA, and they're about to do it again with DL. People may laugh at the idea of DL challenging AA in ORD, but it may be a reality sooner than we think, and if anyone is going to do it, it's DL.

On the contrary, AA has significant leverage. Without AA's cooperation, this has no chance of getting financing. Just too risky... AA could even press the issue more by suing and holding things up for years. (Emanuel could have another Lucas Museum debacle on his hands.)

As to Delta, this is getting ridiculous: Delta's current market share is 4%. American's market share is 37%. (No wonder people are laughing at the idea of DL challenging AA in ORD.)

727200 · Wed Feb 28, 2018 10:28 pm

On paper AA may have some pull, but this is ORD and you could be King Kong but without the political coverage, your nothing more than a baby chimp in a Tarzan movie. They can't over play their hand or they will get crumbs and be happy with that. UA is in the drivers seat and everyone else is just along for the ride.

kngkyle · Wed Feb 28, 2018 10:29 pm

ldvaviation wrote:
neomax wrote:
kngkyle wrote:
You bring up a good point. AA is in a bad spot in terms of leverage, especially with UA on the other side. UA is still king at ORD and the city knows it. The city is not going to lose if UA gets stronger and UA definitely isn't going to lose anything. It's really AA that stands to lose, and then you have the wild card-DL. DL is staying silent to avoid attracting attention, but there is no question they have plans in the wings. I can definitely see a situation where UA gains a stronghold and leaves AA to split the rest with a stronger Int'l Skyteam and Delta presence as a growing equal to AA. AA needs to fight a lot harder if they want to stay relevant in ORD. They're already trailing behind UA and could be in the rearview of DL if they don't act fast. The biggest mistake somebody can make in this industry is underestimate their competitor. They've already done it once with UA, and they're about to do it again with DL. People may laugh at the idea of DL challenging AA in ORD, but it may be a reality sooner than we think, and if anyone is going to do it, it's DL.

On the contrary, AA has significant leverage. Without AA's cooperation, this has no chance of getting financing. Just too risky... AA could even press the issue more by suing and holding things up for years. (Emanuel could have another Lucas Museum debacle on his hands.)

As to Delta, this is getting ridiculous: Delta's current market share is 4%. American's market share is 37%. (No wonder people are laughing at the idea of DL challenging AA in ORD.)

How would AA not signing impact financing? The financing for this project is based on future passenger revenue. AA and UA are not directly paying for any of it. Unless you believe that passenger traffic at ORD will collapse then there is no risk. And I don't think anyone here would argue that passenger traffic at ORD is about to collapse. Even if AA went nuclear and de-hubbed ORD, other airlines would gleefully backfill the capacity. In fact, AA not signing the deal would increase their fees dramatically to the point that the City of Chicago would actually get more revenue.

The only leverage AA has is going public with their grievances. If they had any other leverage then this whole public dispute would never have happened.

LAXdude1023 · Wed Feb 28, 2018 10:32 pm

ORDfan wrote:
ScottB wrote:
ORDfan wrote:
If you're trying to use socioeconomic metrics to prove a point regarding demand for air travel and subsequent demand for hubs/focus cities, perhaps metro GDP is a better indicator. Metro CSA Chicago GDP is 26% greater than Metro DC CSA, and 39% greater than San Fran CSA. Perhaps this doesn't fit your narrative about why DL should not increase service to Chicago. Subjectively, I don't really care since I think DL is so overrated that it's laughable. If they left ORD tomorrow, I wouldn't bat an eyelash for them.

In 2016, the S.F. Bay Area CSA (officially San Jose-San Francisco-Oakland) had estimated GDP of $821 billion, third in the nation. Washington-Baltimore was just behind at $724 billion. Chicago was fifth at $659 billion. So no, Chicago doesn't produce greater GDP than either of those regions and in fact it significantly lags both in GDP per capita as well. Both the Bay Area and Washington-Baltimore are growing significantly faster than Chicago as well; if current growth rates hold, Washington-Baltimore will eclipse Chicago in population by 2020.

Chicago is an important market and DL needs to serve it well from its hubs and focus cities if it wants to be the preferred carrier for business travel in those markets, but it is no more critical to the airline than WAS/BWI and SFO/SJC/OAK. Arguably Delta recognizes the value of serving Chicago well from its core hub markets in that they are the only legacy carrier still serving MDW, and from three hubs no less.

Factually incorrect. Your source please?? Not sure which wiki search you are using.

Here's mine:

https://bea.gov/newsreleases/regional/g ... ro0917.pdf

You have to learn the difference between MSA and CSA. The Bay Area and DC/Baltimore have larger GDP's than Chicagoland by CSA (combined statistical area). Chicagoland has a larger GDP than the San Francisco Metro Area alone, the DC Metro Area alone, San Jose metro area alone, or the Baltimore Metro Area alone.

Thats the difference.

Also, it should be noted that DC/Baltimore CSA will pass the Chicago CSA in population very soon.

kngkyle · Wed Feb 28, 2018 10:39 pm

https://twitter.com/BenBradleyTV/status ... 7305081859

"Rahm's office says O'Hare expansion can proceed, with or without American Airlines' support."

https://twitter.com/BenBradleyTV/status ... 0141047808

City Hall said "we can do it without American." American said "we'll explore our options."

Cubsrule · Wed Feb 28, 2018 11:00 pm

LAXdude1023 wrote:
ORDfan wrote:
ScottB wrote:

In 2016, the S.F. Bay Area CSA (officially San Jose-San Francisco-Oakland) had estimated GDP of $821 billion, third in the nation. Washington-Baltimore was just behind at $724 billion. Chicago was fifth at $659 billion. So no, Chicago doesn't produce greater GDP than either of those regions and in fact it significantly lags both in GDP per capita as well. Both the Bay Area and Washington-Baltimore are growing significantly faster than Chicago as well; if current growth rates hold, Washington-Baltimore will eclipse Chicago in population by 2020.

Chicago is an important market and DL needs to serve it well from its hubs and focus cities if it wants to be the preferred carrier for business travel in those markets, but it is no more critical to the airline than WAS/BWI and SFO/SJC/OAK. Arguably Delta recognizes the value of serving Chicago well from its core hub markets in that they are the only legacy carrier still serving MDW, and from three hubs no less.

Factually incorrect. Your source please?? Not sure which wiki search you are using.

Here's mine:

https://bea.gov/newsreleases/regional/g ... ro0917.pdf

You have to learn the difference between MSA and CSA. The Bay Area and DC/Baltimore have larger GDP's than Chicagoland by CSA (combined statistical area). Chicagoland has a larger GDP than the San Francisco Metro Area alone, the DC Metro Area alone, San Jose metro area alone, or the Baltimore Metro Area alone.

Thats the difference.

Also, it should be noted that DC/Baltimore CSA will pass the Chicago CSA in population very soon.

Yes, but I'm not sure that is quite apples-to-apples. Is Baltimore more deserving of being grouped with Washington than Milwaukee is with Chicago? The number of miles criterion says yes, the "continuous urban sprawl" criterion might suggest no.

ldvaviation · Wed Feb 28, 2018 11:07 pm

kngkyle wrote:
How would AA not signing impact financing? The financing for this project is based on future passenger revenue. AA and UA are not directly paying for any of it. Unless you believe that passenger traffic at ORD will collapse then there is no risk. And I don't think anyone here would argue that passenger traffic at ORD is about to collapse. Even if AA went nuclear and de-hubbed ORD, other airlines would gleefully backfill the capacity. In fact, AA not signing the deal would increase their fees dramatically to the point that the City of Chicago would actually get more revenue.

The only leverage AA has is going public with their grievances. If they had any other leverage then this whole public dispute would never have happened.

We are talking about 37% of the airport capacity being subject to a separate lease. In other words, if AA does not sign the lease that backs the financing for the terminal expansion, 37% of ORD passenger capacity could not be used as collateral for the financing.

ORD would have to prepare underwriting for a bond issue with the principal collateral being future passenger revenue from United (44%). There is the increased risk.

Airlines have also sued to stop the imposition of new airport fees which they consider unfair. You can certainly try to charge one airline more just because they don't want to play nice. But if precedent is any guide airlines usually sue under those circumstances. Take the example of LAX. There non-signatory airlines sued because they were going to be charged more than signatory airlines. LAX eventually settled the suits. Until then, LAX could not proceed with any terminal improvements because without the additional revenue from the new rate structure it could not seek additional financing.

ADrum23 · Wed Feb 28, 2018 11:09 pm

I agree this plan is a little too tilted in UA's favor, but that should be expected given UA's hometown status. I hope AA doesn't downsize or even dehub ORD long term if they can't figure something out. Hopefully, this gets resolved soon.

ldvaviation · Wed Feb 28, 2018 11:10 pm

neomax wrote:
Dayyyum, Rahm's bringing the heat.

Emanuel is a loser. He lost the Lucas Museum. He's going to lose this one too...

neomax · Wed Feb 28, 2018 11:14 pm

kngkyle wrote:
https://twitter.com/BenBradleyTV/status/968927037305081859

"Rahm's office says O'Hare expansion can proceed, with or without American Airlines' support."

https://twitter.com/BenBradleyTV/status ... 0141047808

City Hall said "we can do it without American." American said "we'll explore our options."

Dayyyum, Rahm's bringing the heat.

ADrum23 · Wed Feb 28, 2018 11:17 pm

neomax wrote:
I can definitely see a situation where UA gains a stronghold and leaves AA to split the rest with a stronger Int'l Skyteam and Delta presence as a growing equal to AA. AA needs to fight a lot harder if they want to stay relevant in ORD. They're already trailing behind UA and could be in the rearview of DL if they don't act fast. The biggest mistake somebody can make in this industry is underestimate their competitor. They've already done it once with UA, and they're about to do it again with DL. People may laugh at the idea of DL challenging AA in ORD, but it may be a reality sooner than we think, and if anyone is going to do it, it's DL.

So will either MSP or DTW be dehubbed in order to make room for this new 500 flight hub DL will build at ORD? Unless DL is willing to build a hub of that size at ORD, there will be no challenging AA.

LAXdude1023 · Thu Mar 01, 2018 12:39 am

Cubsrule wrote:
LAXdude1023 wrote:
ORDfan wrote:

Factually incorrect. Your source please?? Not sure which wiki search you are using.

Here's mine:

https://bea.gov/newsreleases/regional/g ... ro0917.pdf

You have to learn the difference between MSA and CSA. The Bay Area and DC/Baltimore have larger GDP's than Chicagoland by CSA (combined statistical area). Chicagoland has a larger GDP than the San Francisco Metro Area alone, the DC Metro Area alone, San Jose metro area alone, or the Baltimore Metro Area alone.

Thats the difference.

Also, it should be noted that DC/Baltimore CSA will pass the Chicago CSA in population very soon.

Yes, but I'm not sure that is quite apples-to-apples. Is Baltimore more deserving of being grouped with Washington than Milwaukee is with Chicago? The number of miles criterion says yes, the "continuous urban sprawl" criterion might suggest no.

Those numbers are based on commute patterns. Nothing more. The idea is that those numbers dictate how tied cities are to each other. Plus DC and Baltimore are geographically closer and it’s pretty well all developed between the two.

Cubsrule · Thu Mar 01, 2018 12:53 am

LAXdude1023 wrote:
Cubsrule wrote:
LAXdude1023 wrote:

You have to learn the difference between MSA and CSA. The Bay Area and DC/Baltimore have larger GDP's than Chicagoland by CSA (combined statistical area). Chicagoland has a larger GDP than the San Francisco Metro Area alone, the DC Metro Area alone, San Jose metro area alone, or the Baltimore Metro Area alone.

Thats the difference.

Also, it should be noted that DC/Baltimore CSA will pass the Chicago CSA in population very soon.

Yes, but I'm not sure that is quite apples-to-apples. Is Baltimore more deserving of being grouped with Washington than Milwaukee is with Chicago? The number of miles criterion says yes, the "continuous urban sprawl" criterion might suggest no.

Those numbers are based on commute patterns. Nothing more. The idea is that those numbers dictate how tied cities are to each other. Plus DC and Baltimore are geographically closer and it’s pretty well all developed between the two.

Right, but commute patterns punish economically strong cities. Clarksville, Tennessee isn’t in the Nashville CSA for that reason even though basically 100 percent of its air traffic uses BNA.

nomorerjs · Thu Mar 01, 2018 1:04 am

AAs not leaving ORD and DL is not making ORD a focus city (but a huge spoke).

Typical Chicago politics.

jayunited · Thu Mar 01, 2018 1:13 am

ldvaviation wrote:
We are talking about 37% of the airport capacity being subject to a separate lease. In other words, if AA does not sign the lease that backs the financing for the terminal expansion, 37% of ORD passenger capacity could not be used as collateral for the financing.

ORD would have to prepare underwriting for a bond issue with the principal collateral being future passenger revenue from United (44%). There is the increased risk.

Airlines have also sued to stop the imposition of new airport fees which they consider unfair. You can certainly try to charge one airline more just because they don't want to play nice. But if precedent is any guide airlines usually sue under those circumstances. Take the example of LAX. There non-signatory airlines sued because they were going to be charged more than signatory airlines. LAX eventually settled the suits. Until then, LAX could not proceed with any terminal improvements because without the additional revenue from the new rate structure it could not seek additional financing.

But you are missing one small thing if American doesn't sign they would have to worry about loosing more than just 5 gates to UA, the city could strip 10, 20, or 25 gates from AA, and open those gates up to UA, DL, B6, VX, or any other carrier. You believe AA has some leverage once their lease has expired they loose all leverage and the city could then take ownership over all of AA's gates. Rahm is not about to let AA or any other carrier stand in the way of O'Hare Expansion. There is no way the city of Chicago does not have a contingency plan to cover this type of situation. Should AA be stupid enough to let their lease expire without signing the new agreement we will get a chance to see the contingency plan. AA has a lot to loose here and for what 5 gates, I guarantee you this is nothing more than grandstanding, this is the true definition of an empty threat. The city of Chicago has been waiting 35 years for this moment there is no way they allow AA to get in the way.

United1 · Thu Mar 01, 2018 1:46 am

ldvaviation wrote:
kngkyle wrote:

We are talking about 37% of the airport capacity being subject to a separate lease.

What lease? AAs ends in May....I can almost guarantee this offer from the city offers far better lease terms to AA then one negotiated later down the road will. This is simply AA trying to be greedy and flailing about a bit as they didn't get everything they wanted. The only leverage they have is to try this stunt...

As others have said should AA decide to not renew and dehubs Chicago UA, DL, F9 ect will simply expand and pick up the slack.

AA is a big part of O'hare (and Chicago) but it's not a critical part...UA is...between the gates themselves, back offices, reservations, TechOps and HQ in the loop the City knows which airline generates most of their airline related revenue.

neomax · Thu Mar 01, 2018 2:04 am

The question is if AA is willing to back down or not.

If they do, it will be behind closed doors to save face.

But if they are serious about this accusation, they WILL lose dozens of gates when the lease expires. Rahm doesn't care what AA thinks because UA is the boss in town. If AA is willing to risk a standoff, it really is an all or nothing situation. The city has to have thought about this, given the fact that Rahm actually said that they would do this without AA. That is a pretty bold threat to make, and would drastically reshape ORD, so he must be pretty serious about it. As was mentioned, it might not be long before we find out what the contingency plan is.

United1 · Thu Mar 01, 2018 2:04 am

neomax wrote:
The question is if AA is willing to back down or not.

I don't think they have a choice if they want to keep a hub at ORD....UA, DL, NK and AS all endorsed the deal publicly today.

AA is standing alone on this...

ADrum23 · Thu Mar 01, 2018 2:08 am

United1 wrote:
ldvaviation wrote:
kngkyle wrote:

We are talking about 37% of the airport capacity being subject to a separate lease.

What lease? AAs ends in May....I can almost guarantee this offer from the city offers far better lease terms to AA then one negotiated later down the road will. This is simply AA trying to be greedy and flailing about a bit as they didn't get everything they wanted. The only leverage they have is to try this stunt...

As others have said should AA decide to not renew and dehubs Chicago UA, DL, F9 ect will simply expand and pick up the slack.

AA is a big part of O'hare (and Chicago) but it's not a critical part...UA is...between the gates themselves, back offices, reservations, TechOps and HQ in the loop the City knows which airline generates most of their airline related revenue.

What exactly did AA want from this anyway? Surely they weren’t under any delusions that they’d get enough gates to overtake UA?

Also, where exactly are these new 5 gates UA gets?

United1 · Thu Mar 01, 2018 2:17 am

ADrum23 wrote:
United1 wrote:
ldvaviation wrote:

What lease? AAs ends in May....I can almost guarantee this offer from the city offers far better lease terms to AA then one negotiated later down the road will. This is simply AA trying to be greedy and flailing about a bit as they didn't get everything they wanted. The only leverage they have is to try this stunt...

As others have said should AA decide to not renew and dehubs Chicago UA, DL, F9 ect will simply expand and pick up the slack.

AA is a big part of O'hare (and Chicago) but it's not a critical part...UA is...between the gates themselves, back offices, reservations, TechOps and HQ in the loop the City knows which airline generates most of their airline related revenue.

What exactly did AA want from this anyway? Surely they weren’t under any delusions that they’d get enough gates to overtake UA?

Also, where exactly are these new 5 gates UA gets?

The city negotiated an agreement with UA 18 months ago giving them 5 more gates when new gates are built. That was done to get UA to sign off on AAs 5 gate T3 extension AA is mad as they want those five gates that UA agreed to 18 months ago to to be includes as part of the new gates UA is getting as part of the expansion. The way the agreement supposedly has been written is those five gates are on top of the new share of gates UA is getting.

ie UA has agreed to:
Current gates + 5 gates + new share

AA wants UA to have:
Current gates + new share

In short AA doesn't expect to pass UA they simply want a slightly bigger share of the new gates.

I think I heard somewhere DL is giving up one more gate to UA in T2 sometime this year but I haven't seen that confirmed anywhere.

ILS28ORD · Thu Mar 01, 2018 2:43 am

ADrum23 wrote:
United1 wrote:
ldvaviation wrote:

What lease? AAs ends in May....I can almost guarantee this offer from the city offers far better lease terms to AA then one negotiated later down the road will. This is simply AA trying to be greedy and flailing about a bit as they didn't get everything they wanted. The only leverage they have is to try this stunt...

As others have said should AA decide to not renew and dehubs Chicago UA, DL, F9 ect will simply expand and pick up the slack.

AA is a big part of O'hare (and Chicago) but it's not a critical part...UA is...between the gates themselves, back offices, reservations, TechOps and HQ in the loop the City knows which airline generates most of their airline related revenue.

What exactly did AA want from this anyway? Surely they weren’t under any delusions that they’d get enough gates to overtake UA?

Also, where exactly are these new 5 gates UA gets?

Chances are if AA did get more gates in the expansion and could over take UA, UA would never sign off on it. AA would probably fill those gates with 100 more 50-seat ERJ flights per day anyway. (Sarcasm)

ADrum23 · Thu Mar 01, 2018 2:44 am

United1 wrote:
ADrum23 wrote:
United1 wrote:

What lease? AAs ends in May....I can almost guarantee this offer from the city offers far better lease terms to AA then one negotiated later down the road will. This is simply AA trying to be greedy and flailing about a bit as they didn't get everything they wanted. The only leverage they have is to try this stunt...

As others have said should AA decide to not renew and dehubs Chicago UA, DL, F9 ect will simply expand and pick up the slack.

AA is a big part of O'hare (and Chicago) but it's not a critical part...UA is...between the gates themselves, back offices, reservations, TechOps and HQ in the loop the City knows which airline generates most of their airline related revenue.

What exactly did AA want from this anyway? Surely they weren’t under any delusions that they’d get enough gates to overtake UA?

Also, where exactly are these new 5 gates UA gets?

The city negotiated an agreement with UA 18 months ago giving them 5 more gates when new gates are built. That was done to get UA to sign off on AAs 5 gate T3 extension AA is mad as they want those five gates that UA agreed to 18 months ago to to be includes as part of the new gates UA is getting as part of the expansion. The way the agreement supposedly has been written is those five gates are on top of the new share of gates UA is getting.

ie UA has agreed to:
Current gates + 5 gates + new share

AA wants UA to have:
Current gates + new share

In short AA doesn't expect to pass UA they simply want a slightly bigger share of the new gates.

I think I heard somewhere DL is giving up one more gate to UA in T2 sometime this year but I haven't seen that confirmed anywhere.

I see. In that case, even though I think that agreement between UA and the city is ridiculous, it is petty for AA to not sign the lease based on that. How many flights will UA realistically add from those 5 additional gates that will make them insurmountable?

I’m sure they’ll come around and sign soon. AA needs ORD because they would not have a Midwest presence if they dehubbed, and all of their remaining hubs would then be concentrated on the east coast and southwest. Not ideal.

ual763 · Thu Mar 01, 2018 3:00 am

Just a pipe dream here, but maybe AA will tell the CDA to shove it where the sun don't shine, pack up their bags, head up to Milwaukee, build a new terminal and hub in MKE, all while in the process naming it Milwaukee-Chicago Mitchell Intl. Airport, kinda like BWI! Would be about time that MKE gets some love! Amtrak just needs to get going on the high speed train between MKE and Inion Station in Chicago.

csgnyc · Thu Mar 01, 2018 3:15 am

I'm surprised Delta is OK with the move to T5. Whenever I'm in Chicago, I get to ORD via the blue line train. The O'Hare Blue Line station has easy access to Terminals 1,2,3, but not 5. I thought the blue line was popular with high-fare business traffic from downtown -- it's certainly faster than a taxi.

WROORD · Thu Mar 01, 2018 3:19 am

CHI787ORD wrote:
william wrote:
ual763 wrote:
http://www.chicagotribune.com/news/local/politics/ct-met-city-hall-story-20180223-story.html

I'm still skeptical Western Terminal will ever be built unless ORD starts consistently posting double digit passenger growth every year. You could setup some temporary concourses on the western side if T3 was demolished and rebuilt however.

With the runways reconfiguration and the new T2, the western Terminal will never happen. They can just add another parallel concourse to T2 to expand,but before that happens T1 and T3 will be replaced.

ual763 · Thu Mar 01, 2018 3:41 am

ual763 wrote:
Just a pipe dream here, but maybe AA will tell the CDA to shove it where the sun don't shine, pack up their bags, head up to Milwaukee, build a new terminal and hub in MKE, all while in the process naming it Milwaukee-Chicago Mitchell Intl. Airport, kinda like BWI! Would be about time that MKE gets some love! Amtrak just needs to get going on the high speed train between MKE and Inion Station in Chicago.

Too late to edit this, but honestly, it takes "about" the same amount of time to take the Amtrak from MKE (airport, not downtown), to downtown Chicago as it does to take the CTA, or especially a cab, from O'hare to downtown. Add in a few more express trains like they have between BWI and Union Station in DC, and I really think it could be a viable option for American. It would take a while for it to become really profitable. But, I think if done properly, it could eventually become an extremely lucrative and profitable hub, kind of like MSP is for Delta. But the name would have to have Chicago in it somewhere to make it work. Add a daily 777/787 flight from BA and they'd be golden! Not to mention the huge corporations coming to southern Wisconsin cities such as Racine and Kenosha.

jbs2886 · Thu Mar 01, 2018 4:10 am

ual763 wrote:
ual763 wrote:
Just a pipe dream here, but maybe AA will tell the CDA to shove it where the sun don't shine, pack up their bags, head up to Milwaukee, build a new terminal and hub in MKE, all while in the process naming it Milwaukee-Chicago Mitchell Intl. Airport, kinda like BWI! Would be about time that MKE gets some love! Amtrak just needs to get going on the high speed train between MKE and Inion Station in Chicago.

Too late to edit this, but honestly, it takes "about" the same amount of time to take the Amtrak from MKE (airport, not downtown), to downtown Chicago as it does to take the CTA, or especially a cab, from O'hare to downtown. Add in a few more express trains like they have between BWI and Union Station in DC, and I really think it could be a viable option for American. It would take a while for it to become really profitable. But, I think if done properly, it could eventually become an extremely lucrative and profitable hub, kind of like MSP is for Delta. But the name would have to have Chicago in it somewhere to make it work. Add a daily 777/787 flight from BA and they'd be golden! Not to mention the huge corporations coming to southern Wisconsin cities such as Racine and Kenosha.

This is never going to happen. Premium passengers and corporate contracts would abandon AA en masse. Moreover, I live in River North/work in the Loop and other than rush hour, can get to O'Hare in 25-30 minutes. Having a train won't allow AA to just move a hub. People have to get to those trains; if the trains make a lot of stops, then the timeline increases.

ual763 · Thu Mar 01, 2018 4:17 am

jbs2886 wrote:
ual763 wrote:
ual763 wrote:
Just a pipe dream here, but maybe AA will tell the CDA to shove it where the sun don't shine, pack up their bags, head up to Milwaukee, build a new terminal and hub in MKE, all while in the process naming it Milwaukee-Chicago Mitchell Intl. Airport, kinda like BWI! Would be about time that MKE gets some love! Amtrak just needs to get going on the high speed train between MKE and Inion Station in Chicago.

Too late to edit this, but honestly, it takes "about" the same amount of time to take the Amtrak from MKE (airport, not downtown), to downtown Chicago as it does to take the CTA, or especially a cab, from O'hare to downtown. Add in a few more express trains like they have between BWI and Union Station in DC, and I really think it could be a viable option for American. It would take a while for it to become really profitable. But, I think if done properly, it could eventually become an extremely lucrative and profitable hub, kind of like MSP is for Delta. But the name would have to have Chicago in it somewhere to make it work. Add a daily 777/787 flight from BA and they'd be golden! Not to mention the huge corporations coming to southern Wisconsin cities such as Racine and Kenosha.

This is never going to happen. Premium passengers and corporate contracts would abandon AA en masse. Moreover, I live in River North/work in the Loop and other than rush hour, can get to O'Hare in 25-30 minutes. Having a train won't allow AA to just move a hub. People have to get to those trains; if the trains make a lot of stops, then the timeline increases.

Hence the express train MKE direct Union station non-stop. High speed train on this route is already in the works, I think. Pipe dream, I know, but I do think it could work. Milwaukee is very similar to MSP in a lot of aspects. It's an up and coming city, and is close enough to Chicago to market it as a viable alternative to O'hare, given the necessary upgrades that would need to take place.

jayunited · Thu Mar 01, 2018 4:38 am

ual763 wrote:
Hence the express train MKE direct Union station non-stop. High speed train on this route is already in the works, I think. Pipe dream, I know, but I do think it could work. Milwaukee is very similar to MSP in a lot of aspects. It's an up and coming city, and is close enough to Chicago to market it as a viable alternative to O'hare, given the necessary upgrades that would need to take place.

It was already reported in a few weeks ago Rahm is interested in adding high speed rail service between ORD and downtown Chicago and Elon Musk submitted a proposal to build a underground high speed rail between ORD and downtown the rail would use the under ground "Superstation" which currently sits empty and unused underneath Block 37. High speed train service between MKE and downtown Chicago is nothing more than a pipe dream that will never happen because the trains currently use the same tracks as freight and Metra trains and from what I've seen and heard there are no plans to separate the service to MKE from the current tracks. So high speed service is dead before it even arrives which is why Rahm wants high speed service between ORD and downtown but even that proposed service faces substantial hurdles.

The truth is both AA and UA have enjoyed 35 years of absolute power at ORD and in a few months their leases will expire. For years other airlines have been begging for more access to ORD but that access was blocked by both AA and UA. If AA allows their lease to expire make no mistake about it the city of Chicago has plenty of airlines just waiting to take over some of AA's gates.

RyanairGuru · Thu Mar 01, 2018 4:52 am

kngkyle wrote:
United has responded publicly:

United fired back: "It is disingenuous for American to make these claims.

"This was not a secret deal reached at the last minute," an airline spokesman said. "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."

https://www.cnbc.com/2018/02/28/america ... gates.html

It increasingly seems like a feud between UA and AA that the city had to pick a side on in order to move forward. One party wasn't going to be happy no matter what.

As much as the City would love to not pick a side, they will almost always side with United over American, so AA can’t really win this round even if it wasn’t over an already settled lease. United is not only larger at ORD, with their HQ locally they contribute a lot more to the City’s finances and to the local economy.

ctrabs0114 · Thu Mar 01, 2018 5:27 am

ADrum23 wrote:
I agree this plan is a little too tilted in UA's favor, but that should be expected given UA's hometown status. I hope AA doesn't downsize or even dehub ORD long term if they can't figure something out. Hopefully, this gets resolved soon.

These lines from the Trib article sums up the way AA could potentially shoot themselves in the collective foot if the City of Chicago responds in a fashion adverse to AA:

But it’s also hard to see American backing out if it meant losing its Chicago hub, he added. The city has a large local market with lots of business travelers and is well-positioned to serve passengers connecting between other cities.

“It would be tough as well as expensive for American to walk away,” Harteveldt said. “They would essentially cede Chicago to United, and to a lesser extent Southwest.”

I get that WN's fortress hub at MDW and AA's hub at ORD are apples and oranges, so I don't get why AA would have to worry about WN potentially benefiting from any hypothetical draw-down at ORD. It's not like MDW is the Taj Mahal of airports in the U.S. (though it's closer to the Loop).

jagraham · Thu Mar 01, 2018 7:06 am

kngkyle wrote:
ldvaviation wrote:
neomax wrote:

On the contrary, AA has significant leverage. Without AA's cooperation, this has no chance of getting financing. Just too risky... AA could even press the issue more by suing and holding things up for years. (Emanuel could have another Lucas Museum debacle on his hands.)

As to Delta, this is getting ridiculous: Delta's current market share is 4%. American's market share is 37%. (No wonder people are laughing at the idea of DL challenging AA in ORD.)

How would AA not signing impact financing? The financing for this project is based on future passenger revenue. AA and UA are not directly paying for any of it. Unless you believe that passenger traffic at ORD will collapse then there is no risk. And I don't think anyone here would argue that passenger traffic at ORD is about to collapse. Even if AA went nuclear and de-hubbed ORD, other airlines would gleefully backfill the capacity. In fact, AA not signing the deal would increase their fees dramatically to the point that the City of Chicago would actually get more revenue.

The only leverage AA has is going public with their grievances. If they had any other leverage then this whole public dispute would never have happened.

AA can also sue . .

Planeboy17 · Thu Mar 01, 2018 6:04 pm

Hi, my first post for a looooong time lurker. A lot of things here but just to give my 2 cents. So here it goes.
First with Delta usurping AA. Ridiculous. Period. I understand that AA is at odds with the city, but do any of you truly believe that AA will just walk away from a hub in the third largest city and MSA with 62 Fortune 1000 companies located here ( 2nd overall to NY) and a central location which if lost would force everything through DFW along with all of the One World carriers at ORD?
Second.This idea of going to MKE to set up a hub. No. First AA currently has roughly 67 gates currently not including the 5 stinger gates soon to open. MKE has a total of 48 gates. How is that going to work? And what about IB, CX, RJ, AY, BA ,JL and QR? Are they actually going to follow AA up to MKE? And Milwaukee is not really close to the Twin Cities area. The MSA for greater MSP is twice what it is for MKE area. 3,551,036 to 1,572,482. 16th to 39th nationally along with 26 Fortune 1000 companies to
13 for MKE. I love Milwaukee, it’s a great city and area but no way could AA just move up the road 70 miles and everything will turn just fine.
Last and what I find most interesting is why was Air China on any of these plans presented. Someone picked up on this earlier in the thread but I think this deserves more attention. Does the city know something about Hainan or China Eastern possibly leaving because right now Air China could only fly to ORD from a tier 2 Chinese city. I don’t think UA would give up one of their PVG or PEK flights for them. Was this just a labeling mistake? I don’t think so because who would they be mistaking Air China for.
I realize by schedule that Hainan and China Eastern don’t appear to be doing gangbusters at ORD but I’d be surprised if one of them pulled completely. Maybe the city knows something about Hanian’s financial issues and they’ve signaled to the city about possibly leaving ORD.
Thanks to everyone who contributes to this site, it has provided me with great entertainment for some 20 years or so.

chicawgo · Thu Mar 01, 2018 6:14 pm

ctrabs0114 wrote:
ADrum23 wrote:
I agree this plan is a little too tilted in UA's favor, but that should be expected given UA's hometown status. I hope AA doesn't downsize or even dehub ORD long term if they can't figure something out. Hopefully, this gets resolved soon.

These lines from the Trib article sums up the way AA could potentially shoot themselves in the collective foot if the City of Chicago responds in a fashion adverse to AA:

But it’s also hard to see American backing out if it meant losing its Chicago hub, he added. The city has a large local market with lots of business travelers and is well-positioned to serve passengers connecting between other cities.

“It would be tough as well as expensive for American to walk away,” Harteveldt said. “They would essentially cede Chicago to United, and to a lesser extent Southwest.”

I get that WN's fortress hub at MDW and AA's hub at ORD are apples and oranges, so I don't get why AA would have to worry about WN potentially benefiting from any hypothetical draw-down at ORD. It's not like MDW is the Taj Mahal of airports in the U.S. (though it's closer to the Loop).

You don't think that AA dehubbing would help WN? How could it not help them?

On another note, as has been alluded to many times, AA has a strong O&D following in Chicago. It's likely that they have a notably higher percentage of Chicago-based O&D traffic than UA. They're not going anywhere.

blockski · Thu Mar 01, 2018 7:21 pm

ual763 wrote:
ual763 wrote:
Just a pipe dream here, but maybe AA will tell the CDA to shove it where the sun don't shine, pack up their bags, head up to Milwaukee, build a new terminal and hub in MKE, all while in the process naming it Milwaukee-Chicago Mitchell Intl. Airport, kinda like BWI! Would be about time that MKE gets some love! Amtrak just needs to get going on the high speed train between MKE and Inion Station in Chicago.

Too late to edit this, but honestly, it takes "about" the same amount of time to take the Amtrak from MKE (airport, not downtown), to downtown Chicago as it does to take the CTA, or especially a cab, from O'hare to downtown. Add in a few more express trains like they have between BWI and Union Station in DC, and I really think it could be a viable option for American. It would take a while for it to become really profitable. But, I think if done properly, it could eventually become an extremely lucrative and profitable hub, kind of like MSP is for Delta. But the name would have to have Chicago in it somewhere to make it work. Add a daily 777/787 flight from BA and they'd be golden! Not to mention the huge corporations coming to southern Wisconsin cities such as Racine and Kenosha.

Amtrak's timetable shows a travel time from the MKE airport rail station to Union Station of between 1:15 and 1:20. CTA's average travel time on the Blue Line from ORD to the Loop is 40-45 minutes.

So, no, it's more like twice as much time, not half the time. Not to mention that the Hiawatha train runs 7 times daily. The Blue Line runs every three minutes at rush hour, and it operates 24 hours a day.

Just as a point of comparison, too, Downtown DC and Baltimore are about 45 miles apart. Downtown Milwaukee and the Loop are about 90 miles apart. The two cities are much further apart than it may seem.

kavok · Thu Mar 01, 2018 8:04 pm

Not a popular sentiment on this thread, but in a mythical situation where DL approached AA and said “We will trade you our MSP and DTW hubs for your ‘half’ of the ORD hub”... AAs response would be “Where do we sign?”.

Obviously Chicago is a much larger overall market than DTW or MSP, but DL is more profitable in the Midwest than AA because AA has to share ORD with UA, and also compete with Southwest at Midway.

It is for this reason DL will not be giving up their Midwest hubs at DTW or MSP anytime soon, which means we will not see a DL build up of ORD anytime soon either. DL realizes the cash cow they have with their two Midwest fortress hubs, and there is no way to build up ORD without taking some traffic from those hubs.

United787 · Thu Mar 01, 2018 8:50 pm

chicawgo wrote:
On another note, as has been alluded to many times, AA has a strong O&D following in Chicago. It's likely that they have a notably higher percentage of Chicago-based O&D traffic than UA. They're not going anywhere.

AA absolutely has a strong O&D base here which is why they aren't going anywhere. But I doubt that they have a higher percentage of O&D than UA but I will leave it to someone else to dig up that statistic. But, AA's network from ORD is lacking compared to UA and I think Chicagoan's, especially frequent fliers, have noticed and I would bet AA's O&D base has decreased in the last 5-10 years.

chicawgo · Thu Mar 01, 2018 9:10 pm

kavok wrote:
Not a popular sentiment on this thread, but in a mythical situation where DL approached AA and said “We will trade you our MSP and DTW hubs for your ‘half’ of the ORD hub”... AAs response would be “Where do we sign?”.

Obviously Chicago is a much larger overall market than DTW or MSP, but DL is more profitable in the Midwest than AA because AA has to share ORD with UA, and also compete with Southwest at Midway.

It is for this reason DL will not be giving up their Midwest hubs at DTW or MSP anytime soon, which means we will not see a DL build up of ORD anytime soon either. DL realizes the cash cow they have with their two Midwest fortress hubs, and there is no way to build up ORD without taking some traffic from those hubs.

Agree with your point but regarding the "more profitable" suggestion, it's not only about highest margin. There's a cap on what you can make. A larger city like Chicago or LA may not have as high margin but overall could have higher absolute profit. Otherwise, every airline would serve only small-midsize cities with no competition.

ctrabs0114 · Thu Mar 01, 2018 10:29 pm

chicawgo wrote:
ctrabs0114 wrote:
ADrum23 wrote:
I agree this plan is a little too tilted in UA's favor, but that should be expected given UA's hometown status. I hope AA doesn't downsize or even dehub ORD long term if they can't figure something out. Hopefully, this gets resolved soon.

These lines from the Trib article sums up the way AA could potentially shoot themselves in the collective foot if the City of Chicago responds in a fashion adverse to AA:

But it’s also hard to see American backing out if it meant losing its Chicago hub, he added. The city has a large local market with lots of business travelers and is well-positioned to serve passengers connecting between other cities.

“It would be tough as well as expensive for American to walk away,” Harteveldt said. “They would essentially cede Chicago to United, and to a lesser extent Southwest.”

I get that WN's fortress hub at MDW and AA's hub at ORD are apples and oranges, so I don't get why AA would have to worry about WN potentially benefiting from any hypothetical draw-down at ORD. It's not like MDW is the Taj Mahal of airports in the U.S. (though it's closer to the Loop).

You don't think that AA dehubbing would help WN? How could it not help them?

On another note, as has been alluded to many times, AA has a strong O&D following in Chicago. It's likely that they have a notably higher percentage of Chicago-based O&D traffic than UA. They're not going anywhere.

I guess it's hard to draw the AA/WN comparison because we're dealing with different airports. I'm not, in any way, suggesting AA would dehub at ORD, but I was trying to understand the correlation.

ILS28ORD · Fri Mar 02, 2018 12:12 am

Here is an article that explains how this spat between AA and UA/the city supposedly started.

https://www.usatoday.com/story/travel/f ... 385405002/

ILS28ORD · Fri Mar 02, 2018 12:15 am

AA supposedly turned down a previous agreement for the same 3 gates they seek now. Wonder if these are the 3 gates on the backside of the 5 new stinger gates shown in the renderings.

ual763 · Fri Mar 02, 2018 1:24 am

ILS28ORD wrote:
AA supposedly turned down a previous agreement for the same 3 gates they seek now. Wonder if these are the 3 gates on the backside of the 5 new stinger gates shown in the renderings.

Wow, I can't believe they would have turned down any gates. In a market like Chicago, you take what you are given and say thank you. You NEVER turn down gates. This will likely come back to haunt them. In a newer tribune article, Ms. Evans was quoted saying that American was offered some concessions a while back and rejected them, but now are scrambling to get those concessions back. She then said that there was a "time and a place" for those concessions and that it has passed. Will be very interesting to see how it all plays out.

RyanairGuru · Fri Mar 02, 2018 2:01 am

ual763 wrote:
ILS28ORD wrote:
AA supposedly turned down a previous agreement for the same 3 gates they seek now. Wonder if these are the 3 gates on the backside of the 5 new stinger gates shown in the renderings.

Wow, I can't believe they would have turned down any gates. In a market like Chicago, you take what you are given and say thank you. You NEVER turn down gates. This will likely come back to haunt them. In a newer tribune article, Ms. Evans was quoted saying that American was offered some concessions a while back and rejected them, but now are scrambling to get those concessions back. She then said that there was a "time and a place" for those concessions and that it has passed. Will be very interesting to see how it all plays out.

Agreed. Turning down gates at ORD seems almost as misguided as UA giving up the leases on the ex-CO gates in T6 at LAX.

jetblastdubai · Fri Mar 02, 2018 2:16 am

RyanairGuru wrote:
Agreed. Turning down gates at ORD seems almost as misguided as UA giving up the leases on the ex-CO gates in T6 at LAX.

According to the USA Today article, UA traded those 4 LAX gates for 2 ORD gates with AA. UA must have determined that 2 ORD gates were more valuable to them than 4 LAX gates. AA, on the other hand voluntarily gave up the ORD gates for the T6 gates at LAX. It appears that AA has more 'buyers remorse' than UA does.

"When American merged with US Airways, the Justice Department required the joint carrier to divest two gates at O’Hare.

“They lost two gates to get that business deal approved,” Molloy said.

American then traded gates between O’Hare and Los Angeles with United. American gave United two gates in Chicago and United gave American four gates in Los Angeles, Molloy said."

muralir · Fri Mar 02, 2018 2:23 am

A few notes:
1) I do believe in the past Delta has officially said they would like more gates at ORD. However, IMHO, the most reasonable interpretation of this is that they're seeking 1 or 2 extra gates to increase flights to their hubs and maybe a couple other strategic destinations, *not* to push for 50-60 gates and compete head-to-head with UA and AA.

2) This infighting between AA and UA does leave a sour taste in one's mouth, but the truth is, there is very little AA can do. Until now, due to the lease agreements in place, UA & AA (and to a lesser extent, even DL) had veto power over a lot of improvements (including the runways, which is why every runway built was a drawn out battle between the city and UA/AA). But once this 35-year lease expires, AA has no power. We Chicagoans are used to hearing about UA & AA interfering in ORD operations, but that was all because of the current lease agreement. It all changes in May. Chicago can set whatever landing fees they like (especially if UA/DL/everyone else agrees to it), and AA can simply decide whether they wish to pay it or land their flights somewhere else. That's the only power they'll have come May.

3) That said, I don't get it: it seems obvious that both UA *and* AA want more gates. So why not a bigger expansion? If AA wants another 5 gates, and UA, to remain competitive, asks for another 10, then build the next western concourse and give them all the gates they want! If they're willing to fund it, then let each of them get another 20 gates if they request it. I understand battles for gates when there are no new gates being built, or when 1 or 2 gates are being shoehorned into some corner of an existing terminal. But with a massive plan like this, why deliberately plan for a shortage of gates? Am I missing something?

ADrum23 · Fri Mar 02, 2018 2:56 am

muralir wrote:
3) That said, I don't get it: it seems obvious that both UA *and* AA want more gates. So why not a bigger expansion? If AA wants another 5 gates, and UA, to remain competitive, asks for another 10, then build the next western concourse and give them all the gates they want! If they're willing to fund it, then let each of them get another 20 gates if they request it. I understand battles for gates when there are no new gates being built, or when 1 or 2 gates are being shoehorned into some corner of an existing terminal. But with a massive plan like this, why deliberately plan for a shortage of gates? Am I missing something?

Bingo, we have a winner! If they want more gates, let em build them and pay for them. Of course, AA could just sign this and wait for the next round of expansion in 15 years and build the western terminal for themselves. Then they can have all the gates they want.

Seriously, AA should just sign this and move on. It's not like UA is going to expand to DFW or ATL levels with this new expansion.

ual763 · Fri Mar 02, 2018 3:55 am

At what point do we think we would start to see some architectural renderings of the new concourses and "architectural upgrades" for the other terminals?

kngkyle · Fri Mar 02, 2018 4:08 am

muralir wrote:
3) That said, I don't get it: it seems obvious that both UA *and* AA want more gates. So why not a bigger expansion? If AA wants another 5 gates, and UA, to remain competitive, asks for another 10, then build the next western concourse and give them all the gates they want! If they're willing to fund it, then let each of them get another 20 gates if they request it. I understand battles for gates when there are no new gates being built, or when 1 or 2 gates are being shoehorned into some corner of an existing terminal. But with a massive plan like this, why deliberately plan for a shortage of gates? Am I missing something?

It's not about the number of gates, it's about the percentage of gates that they control. AA wants as many of the available gates as they can get at ORD to block competition. UA wants as many of the available gates as they can get at ORD for the same reason. You could add 200 gates and they would still dispute the gate allocation claiming they want more. It has little to do with actually wanting gates to expand service. Both UA and AA have room to add service right now if they wanted to by improving gate utilization and upgauging aircraft.

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