The Trouble with O'Hare: Consultants debate and call for closer look at Chicago's OMP

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The Trouble With O'Hare

Consultants debate and call for closer look at Chicago 's OMP

By Jodi Richards

May 2004

Two Illinois communities have banded together to oppose the O'Hare Modernization Program (OMP) in its current form: Bensonville and Elk Grove Village . Joe Del Balzo, a former acting FAA administrator, and Jon Ash, former airline executive and current managing director of Global Aviation Associates, Ltd., are just two members of a team retained by the communities to review the City of Chicago 's plan. Based on the respective experience of the consultants, both are calling for a more detailed review by the FAA.

John Ash (left) and Joseph Del Balzo John AshJoesph Del Balzo

Del Balzo was asked to become the communities' technical consultant. He explains, 'I made it very clear I would enter into it only if the reviews and technical opinions that we reached were independent, objective; they may not like the answer.'

His team began its review of the OMP by looking at the city's claims of capacity increase and delay reduction.

'Our original conclusion was it seems unreasonable. We didn't think you could increase capacity from 900 and some odd thousand operations a year today to 1.6 million, and at the same time reduce delays. We didn't have much to go on other than our experience in the business, because there was very little information that was provided. Shortly after that, the city's consultant came out with a report, and they concluded that you can't do 1.6 million operations per year; at 1.3 million operations per year the airport becomes gridlocked. That reinforced our knee jerk reaction to the city's proposal. We then took a careful look at the city's consultant's analysis.'

Del Balzo says the City's consultant projected O'Hare would be able to perform 1.3 million operations annually with a ten-minute average delay. 'We tried to evaluate whether that was reasonable.'

FIVE BASIC ERRORS

After further review of the consultant's projections, Del Balzo's team determined there are five basic errors with the analysis.

'One, the analysis does not take into account the impact of airspace congestion. Airspace congestion ' meaning that the limiting factor in capacity at O'Hare Airport is not necessarily the number of runways, it's whether or not the airspace is large enough to handle the number of airplanes that the runways can accommodate. There was no analysis done on what impact there would be on airport capacity due to other airplanes in the airspace. And that's a major, major omission.'

The second error, contends Del Balzo, is that the parallel runways the OMP calls for are spaced so close together that in marginal weather conditions, they could not be use simultaneously.

The analysis the city's consultant performed, he explains, assumed that weather would be good enough 97 percent of the time to accept arrivals on four of ORD's runways simultaneously. 'The mistake that they made is when you go into the actual weather database for O'Hare for 2002, 40 percent of the time the weather is not good enough that FAA would permit simultaneous operations on four runways; it would reduce the number of runways that you could operate on to three.

The third mistake, according to Del Balzo, is that the analysis does not take into account the fact that when the six east-west parallel runways are established, a pair of northwest-southeast crosswind runways will be decommissioned.

'The fourth error that was made,' says Del Balzo, 'is the simulation does not take into account, again because the runways are so close together, FAA operating restrictions. For example, the new large aircraft, the A380, can only operate on two of the six runways. And when you're operating on even two of those six runways, when that airplane is taxiing you're limiting the operations that can occur on the adjacent runway.'

Del Balzo says the city's master plan now claims that OMP will handle 1.2 million operations per year, with an average delay of four to five minutes. 'That calculation was based on these four errors.

'The claim of an average four- to five-minute delay is a bogus number. It is bogus because it doesn't take into account summer thunderstorms and other storms. It doesn't take into account other airports that would cause ground holds and delays at O'Hare that have nothing to do with the number of runways at O'Hare. Nor does it take into account delays related to airspace congestion. So when all is said and done, when you do a recalculation with realistic assumptions, you just can't achieve 1.2 million operations a year, certainly not that four to five minutes of delay.'

Adds Del Balzo, 'I stake my credibility on the fact that you cannot achieve 1.2 million operations a year and four- to five-minute average delays. In all likelihood, when you do the recalculations you will be lucky if you do one to 1.1 million operations a year. Which is just about 200,000 more operations a year than now.

'From a safety standpoint,' says Del Balzo, 'there's a significant issue here that should not be taken lightly. This plan doesn't become a reality overnight. This is a plan that is going to take ten to 15 years before it's completed ' ten to 15 years of operational confusion both for the controllers and for pilots going in and out of O'Hare. One of the reasons the aviation system is as safe as it is today is because it's built on standards and routine. At O'Hare, you're really building a new airport on top of an old airport. They're going to be pulling up concrete as they're pouring new concrete ' they're going to be changing runway configurations, changing taxiway configurations, and changing air traffic control procedures.

'There's going to be a significant impact during the construction period,' he adds.

Del Balzo believes the airport will ultimately lose capacity during the construction process, which will then have an impact on the entire aviation system. 'You've got to tear up old runways before you can put down new ones. Depending on phase-in, you'll have more delays than you have today and it will cause a ripple effect throughout the U.S. You're going to have that kind of effect and congestion throughout the U.S.- ' ten to 15 years of chaos on the entire system.

'You reach a point where big becomes too big. What if you could double the capacity at O'Hare ' safely and economically. Is that the smart thing to do? Why would you want to do that rather than spread the resources? The best thing you can do is quickly get that third airport [ South Suburban Airport ] built.'

Other questions Del Balzo raises are, How much is it going to cost and how will the City of Chicago pay for it?

The city's estimate is $6.6 billion, he says. 'We looked at that coast a year and a half ago, and it really seemed like it was underestimated.' Del Balzo's team believes the cost is more likely to be $15 to $20 billion. 'The more we looked at it, the more faith we have in our numbers.'

He adds that the city claims the total cost of O'Hare's master plan is slightly below $14 billion. 'Again, we say it's an underestimation,' says Del Balzo. 'At the end of the day, that number is going to be closer to $24 billion, and we're able to itemize why we believe that is true.

'But even if they could do it for that amount, and I don't believe that they can, how do you finance it?'

The City of Chicago claims financing will come from airport-backed revenue bonds, passenger facility charges, and FAA discretionary dollars, Del Balzo explains.

The current PFC cap is $4.50 per passenger, which is what O'Hare is charging. 'So where does the additional money come from, the passenger facility charge?,' asks Del Balzo. 'The city's answer is, 'That's simple, everybody knows that the PFC is going to be increased to $6 per passenger.' Well, everybody doesn't know that. Congress turned that down, they vetoed that this year. They proposed legislation to leave the cap at $4.50. The airlines are not in a position to absorb another $1.50. They will lobby very hard against that. It's unreasonable to bet $15 billion on the fact that a PFC may be raised when all the signs are pointing in the opposite direction.'

OMP Impact on Fares

ORD Average Domestic Fare

2002 ORD Cost/PAX

2002 ORD Cost as % of Ticket Price

2015 ORD Cost/PAX With OMP1/

2015 ORD Cost as % of Ticket Price

1/ Assumes 25% growth in traffic volume.

Source: AAAE, 2001-2002 Airport Rates & Charges Survey

=

=

=

=

=

$140.74

$ 8.70

6.2%

$ 24.96

17.7%

The level of discretionary dollars has remained a constant $500 million a year, says Del Balzo, which is spread to airports throughout the United States . He adds that in 2003, O'Hare received some $28 million in discretionary money. 'To fund the $6.6 billion program, they'll be looking for $1 billion of discretionary money. And that's at $6.6 billion. I don't have any idea what they'll be looking for at the $14 billion level. Spread that over 10 years: $100 million a year out of the $500 million that's available. That's a nonstarter for FAA, and it will severely impact other airports throughout the U.S.- ' the smaller airports that really depend on discretionary money to stay alive. Probably 12 in this state ( Illinois ) depend on discretionary money for their well-being. They would wither on the vine without discretionary money or if the amount was significantly reduced.'

ECONOMIC IMPACT: AIRLINES
Ash takes a look at the OMP from a 'strategic economic perspective; both in terms of a potential impact on the industry at a macro level, and impact on major network carriers at O'Hare and the potential impacts on the community.'

According to Ash, from an airline cost perspective, O'Hare, with a cost per enplaned passenger of some $9 currently, is fairly competitive. The city's master plan, Ash estimates, would raise the cost per enplaned passenger at O'Hare to some $25 by 2012.

'There's no way you can make a hurdle from $9 to $25 a passenger,' says Ash. 'So what you have is a very large investment and a very small return on that investment, in terms of increased throughput. Thus, a very high unit cost. Airlines are ballistic about airport costs.

'My sense would be that as the airlines really start to examine this, they're going to say no dice.'

Del Balzo says the city must take the existing plan off the table. 'It doesn't work. You can't tweak it, can't fine tune it. Start at the top by looking at the regional needs. There's a capacity shortfall in the region, not just at O'Hare. How can that capacity shortfall be met? What's the real role of Midway? Gary ? Relievers? SSA ( South Suburban Airport )? When you're all done, you can define the proper role of O'Hare and how best to modernize. Focusing on O'Hare is a mistake.'

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