O'Hare's Flight Plan
by Greg Hinz and Julie Johnsson

CRAIN' S CHICAGO BUSINESS - December 22, 1997 - The city of Chicago is launching a major overhaul of O'Hare International Airport's strategic focus and operations-a plan aimed at protecting its ability to compete against other big transportation hubs.

One top goal: focusing expansion efforts on the international market, where Chicago lags behind gateway airports in New York, Los Angeles, and other cities.

O'Hare's strategic shift accompanies a global push by United and American airlines, the airport's two largest carriers. A second priority is protecting O'Hare's existing franchise by making the airport easier to use and more efficient. The city aims to construct a four-lane entry to the airport on its east side, professionalize top management, open up no-bid contracts to competition and lower airline landing fees.

"We do not want to lose our leading edge," says Aviation Commissioner Mary Rose Loney, who is quietly implementing the new strategy as she starts her second year as Chicago's airport boss. "We want to make sure we do not let other airports pass us up."

Ms. Loney's plans include:
  • Shifting the city's priorities to "aggressively pursue" more overseas flights. In the first phase, rents and fees for carriers at the international terminal are being lowered, and the city has sent a representative to trade talks between the U.S. and Japan (CRAIN'S, July 28).
  • A trade pact with Japan, which may be signed as early as January, could net the airport nearly 50 new weekly international flights in 1998. In the next phase, the city will extend its drive to open non-stop routes to other parts of Asia, Latin America, and Europe by marketing the airport to international airlines and their customers.
  • Beginning work on a $30-million access road to O'Hare by extending Balmoral Avenue west from Mannheim Road. Local, state, and airlines officials have agreed in principle to build the new entryway, but are still debating who will pay. The road will relieve pressure on Interstate 190, O'Hare's lone access route, which the city hopes to enlarge later in a $100-million overhaul.
  • Continuing a recent initiative (CRAIN'S, Dec. 1), the city will open for competition most no-bid contracts that remain at O'Hare. Included will be contracts for communications and marketing, automated teller machines and the development of 350 acres of military property that will pass to city control in 1998.
  • Freezing or reducing domestic airport landing fees and rental rates, which had climbed sharply during 1997, for both O'Hare and Midway airports.
  • Hiring the first-ever chief financial officer for O'Hare. Ms. Loney, who herself is the first professional airport manager to be city aviation commissioner, also recently hired a chief operating officer for O'Hare: Alberta Clark, from Atlanta-based Delta Air Lines
The city's actions come as O'Hare faces stiff political challenges.

U.S Reps. Jesse Jackson Jr., D-Chicago, and Henry Hyde-R, Addison, are renewing the drive for a third regional airport in far south suburban Peotone, and suburban forces near O'Hare are blocking city attempts to add a new runway at O'Hare. And, prompted by angry airport neighbors, Springfield Republicans periodically threaten to seize control of operations.

Ms. Loney concedes that the debate over a new runway may rage in election year 1998. "We've never worked to preclude runway expansion," she says. And the governor's race could determine how that issue is resolved.

Says Rep. Hyde, "A favorable Democratic governor would mean curtains for our position."

But Ms. Loney denies that her strategic moves at O'Hare are defensive measures to protect city turf. "I think what we're doing is prudent management," she says.

Shift driven by bottom line

At least some insiders agree. Ms. Loney's cost-cutting efforts enable the city to be more competitive, and that "helps us get more business," says David Woodcock, station manager for Scandinavian Airlines Systems and head of the international carriers group at O'Hare.

The international shift is bottom line driven. Both the city and air carriers make more on each international flight that on domestic service.

Moreover, a key O'Hare ally, big business, contends that Chicago needs nonstop international service to compete with other commercial centers.

Market forces already are making O'Hare more global. One-third of the airport's total passenger growth during the past two years has been in international service, with passenger volume up 56% since the new international terminal opened in 1993.

O'Hare lags other big cities

Overseas passengers will account for more than 8 million of O'Hare's 71 million passengers this year.

But O'Hare still lags behind New York, Miami, Los Angeles and Toronto in international passenger volume-in some cases, badly.

Though the city alone can't change international treaties, it can motivate carriers to boost traffic by cutting rates and being assertive, says Jay Franke, a former Chicago aviation commissioner who now is assistant director of Northwestern University's Transportation Center.

"O'Hare can be a good airport, a cheap airport-which it historically hasn't been," Mr. Franke says.

The city's agreement with Rosemont to build a second, eastern entrance road to O'Hare runs counter to unresolved disputes over opening access to the airport's military side-to the northeast-and to the suburbs-to the west. Those proposed roadways have been caught in the battle over runway expansion.

But while traffic snarls persist around the airport, Ms. Loney offers O'Hare patrons some new amenities: jugglers, roving carolers and even family toilet facilities, complete with baby-changing station and sink.

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