New Terminal Rendering, Credit: City of Chicago
By Gary Leff | View From The Wing
American Airlines and United Airlines want Chicago O’Hare’s expansion that they signed off on in 2018 slowed down – or stopped – as the project runs $1.5 billion over budget. Somehow the carriers are surprised that a massive public infrastructure project, in Chicago no less, is spending far more than originally projected?
And in fact it’s only just the ‘next phase’ where a 24% projected cost overrun totals $1.5 billion more than expected. That’s before construction on the new terminal even starts! The project’s total cost has grown from $8.7 billion to a projected $12.1 billion. So the terminal’s overrun is only one piece of an overall $3.4 billion price increase.
New Terminal Interior Rendering, Credit: City of Chicago
The new project replaces terminal 2, which many Chicago travelers are familiar with because it’s currently where passengers are funneled via airport train to pick up rideshares. The new terminal would handle both domestic and international flights.
It’s unclear whether Chicago’s Mayor will insist that airlines honor the contract or sign off on negotiations for modifying it. American’s performance in Chicago is weaker than United’s, so United could gain territory by playing chicken with American and supporting higher costs. (Historically higher costs in Miami have helped protect American from low cost carrier competition, although that’s been less true in recent years.)
Former Chicago Mayor and current Ambassador to Japan Rahm Emanuel is publicly chastising the two airlines, saying ‘a deal’s a deal’ but they signed off on the deal at a specific price point that’s already out of control, and likely to escalate further. That’s what you get of course with public infrastructure, not least of which in a city like Chicago, so they’re naive to expect costs to line up with original projections.
Read more here.
