CHICAGO: ORD & MDW discussion

[N830MH]

Originally Posted by NikolasM

I can see why AA would be pissed. UAL gets way more out of this.

They won't be pissed with AA. They should listen to the mayor. If they accept the ORD expansion. They have to move forward the ORD terminal project.

[trvlr70]

[QUOTE=Kngkyle;8102436]So AA just came out against the deal saying it favors United.

How annoying of AA to try to scuttle this deal at the last minute! They have neglected the ORD hub for 2 decades and allowed it to wither away from it's early nineties peak. At one point, AA flew to a dozen European cities from this hub. Today, they operate a year-long service to LHR alone. Hononlulu is gone. Mexico City is gone. Now suddenly they give a damn when they perceive that UA gets an advantage. I wish the City would give the gates to Delta at this point.

[k1052]

Originally Posted by Vlajos

Damn Rahm is good

If AA wants to play chicken they’re going to loose on this.

[patrick84]

Originally Posted by Kngkyle

I believe they lose their veto power once the existing lease agreement ends in May. Also going forward neither UA or AA can veto any project that the city (or the other airline) want to do. That is one of the main reasons no terminal expansion has occured - UA would veto anything that benefits AA and AA would veto anything that benefits UA.

Per the original Trib article:

Under the new lease the city is negotiating, the airlines’ unilateral veto power over projects will disappear, Evans said. So, too, will United and American’s right to so-called exclusive-use gates, which stay in their possession no matter how much they’re using them.

The Federal Aviation Administration now prohibits such arrangements in new leases at airports that receive federal funding, noting that the practice locked up gates and allowed airlines to restrict competition and access to a market by other carriers. Under the new O’Hare lease, which is expected to span 15 years, the city will annually evaluate how often airlines are using gates and reallocate them based on use, Evans said.

http://www.chicagotribune.com/news/l...223-story.html

[left of center]

^ AA is probably just airing out grievances to the media and the public in order to try to get some concessions in their favor on this deal. I doubt anything here is a deal breaker for them, and this will end up getting signed. Like many have already said, they don't have too many cards in their hand here, and every day they delay brings us one day closer to May.

[nomarandlee]

Don't remember seeing these details in the local papers. Leave it to a Dallas paper to get the details I guess.........

https://www.dallasnews.com/business/...w-gates-routes


.......If Emanuel's administration and the airlines ink a deal, the massive expansion will change the look, feel and operations at O'Hare.

New concourses would be 150 feet wide, dramatically larger than current ones. Terminals 1, 3 and 5 would get architectural upgrades. Passenger amenities would get a boost, with United and American opening 50,000-square-foot club lounges in the new Global Terminal.

"Some of the terminals at O'Hare date back to the dawn of the jet age," said Henry Harteveldt, a San Francisco-based travel industry analyst and president of Atmosphere Research Group. "The concourses choke. Good God. If you're at O'Hare at rush hour, even on a good day, it resembles one of the circles of hell. The city, the passengers flying to and through O'Hare and the airlines serving the airport all deserve a lot better, and they're going to get it."........

"It is enormously important not to let this very old lease -- which is definitely the strongest airline control lease in the national system -- continue," Evans said. "It just was not in the city's interest to let that kind of extreme airline control continue. . In 1983, they gave away the store, gave away the farm."

United and American's stranglehold over O'Hare -- and their frequent infighting -- often ground improvements or investments to a halt, city officials have said. One famous example took place eight years ago, Evans said, when a security checkpoint had to be shut down because a roof on United's terminal was leaking.......

[Kngkyle]

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/amer...ted-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.

[N830MH]

Originally Posted by Kngkyle

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.

Right! No matter what happened. They should accept it and it is time to move forward the O'Hare terminal projects. It's time for change. Both UA & AA must listen to the mayor. If they have an agreement.

[left of center]

Originally Posted by Kngkyle

United has responded publicly:



https://www.cnbc.com/2018/02/28/amer...ted-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.

In that case AA shouldn't be too surprised the city sided with the hometown airline.

[nomarandlee]

https://www.bizjournals.com/chicago/...expansion.html

What Delta Air Lines stands to gain — and lose — in massive O'Hare expansion

By Lewis Lazare – Reporter, Chicago Business Journal
Feb 27, 2018

Still, if the plan goes forward as outlined, Delta will be housed in a redone Terminal 5 along with its SkyTeam airline alliance international partners KLM, Air France and Korean Air. That will allow Delta passengers to move back and forth easily between Delta-operated domestic flights and those operated by SkyTeam partner carriers.

By offering Delta this arrangement, Emanuel and Chicago Department of Aviation commissioner Ginger Evans apparently succeeded in obtaining Delta's blessing for the O'Hare expansion and upgrade as it is now envisioned.

Noted a Delta spokesman late Monday: "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."

..

[F1 Tommy]

Originally Posted by nomarandlee

..

Delta could care less about Chicago. Infact they would have almost completely pulled out if not for the SkyTeam international carriers making them stay(who the hell wants to come all the way from Europe to visit Atlanta, its a connection city).


This is great news that the city finally is getting it done.

[the urban politician]

^ Im not an expert, but your logic here evades me. Why would American de-hub ORD just over a dispute of a few gates? That would be a disastrous business plan for them.

Seems they would be better off sucking it up and instead looking for other ways to gain access to more gates at O'Hare.

[F1 Tommy]

Originally Posted by the urban politician

^ Im not an expert, but your logic here evades me. Why would American de-hub ORD just over a dispute of a few gates? That would be a disastrous business plan for them.

Seems they would be better off sucking it up and instead looking for other ways to gain access to more gates at O'Hare.

No one will dehub ORD anytime soon. And neither AA or UA will exit ORD ever completely.

[Vlajos]

How much business would American lose by exiting ORD? Seems it would be astronomic and hence virtually outside of reason to do so.

[F1 Tommy]

Originally Posted by Vlajos

How much business would American lose by exiting ORD? Seems it would be astronomic and hence virtually outside of reason to do so.

History does have a way of repeating itself. Chicago could become like all the other US cities that used to have multiple trunk airline hubs.

It's all about their bottom line and profits and control but that will take many years to happen if it ever does.

[the urban politician]

Originally Posted by F1 Tommy

That's not the reason they would dehub. More competition due to more gates is why, just like at all the other US hubs. The present gate fight is a side bar.

Having 2 majors with large nonstop networks fighting for business travelers is better that 1 major with a huge network hub and a bunch of smaller airline hubs with only some non stop routes.

But losing out to competition is something American can control. If it uses its gates, then where should be no problem. What it loses is exclusive control over a large chunk of gates, which was stifling competition. If that was the only way it could compete, then Chicago is probably better off without their dominance. You seem to suggest that Chicago is worse off with more competition.

[F1 Tommy]

Originally Posted by the urban politician

But losing out to competition is something American can control. If it uses its gates, then where should be no problem. What it loses is exclusive control over a large chunk of gates, which was stifling competition. If that was the only way it could compete, then Chicago is probably better off without their dominance. You seem to suggest that Chicago is worse off with more competition.

We will just have to wait and see how this plays out. It should be good for the airport and I am very happy it is happening.

[Sonofsoma]

Although it's been reported AA was holding the deal up. I'd put money on it that the source of any last minute snags is entirely the city. More specifically the behind the scenes fighting among the city, county, state, unions et al to get themselves a piece of the action written into it.

United and American, despite their public posturing, LOVE, LOVE, LOVE O'Hare. Unlike single hubs ATL and DFW, the "O'Hare Duopoly" provides most of what little elasticity exists in the entire country. (50+ LAX and 40+ SFO UA/AA flights a day!) The 90-95% load factors necessary to be profitable would be impossible without KORD.

More importantly, UA/AA couldn't care less about who controls a few gates at an expanded O'Hare - as long as the deal keeps Southwest confined to Midway.

[nomarandlee]

Originally Posted by Sonofsoma

More importantly, UA/AA couldn't care less about who controls a few gates at an expanded O'Hare - as long as the deal keeps Southwest confined to Midway.

That's an interesting point. I'm not sure the lease agreement of Southwest at Midway or the logistical difficulties an airport switch would entail but theoretically Southwest could switch over and fill the nitch at any gaping void left behind at O'Hare.

Obviously, the legacy carriers could never make an even switch and move over to Midway for obvious reasons. For the legacy carriers, it's either O'hare or bust.

I bet a now enlarged Alaska Air would love to try to fill part of the void if American left.

[Khantilever]

Originally Posted by the urban politician

But losing out to competition is something American can control. If it uses its gates, then where should be no problem. What it loses is exclusive control over a large chunk of gates, which was stifling competition. If that was the only way it could compete, then Chicago is probably better off without their dominance. You seem to suggest that Chicago is worse off with more competition.

It's important to keep in mind that, in general, with large hub-and-spoke air carriers we're looking at a case of "natural monopolies" where more competition can indeed make us worse off. Without sufficient control and pricing power it won't be worth it for them to maintain such a large hub. So what we gain in more intense price competition could easily be lost in efficiency.