UAL, AA aim to lock up O'Hare

Byline: PAUL MERRION

United Airlines and American Airlines are lining up congressional support to maintain their dominance at O'Hare International Airport after a new runway allows additional flights at the airport next year.

House Transportation Committee leaders, and key members of the Illinois congressional delegation, have put the panel on record saying United and American should get first dibs on any new capacity created by the expansion of O'Hare, a move that runs counter to efforts by Chicago and federal regulators to promote more competition.

While couched in terms of basic fairness-United and American voluntarily cut schedules by 12.5% in 2004 when flight caps were imposed to reduce delays at O'Hare, so they should recoup that loss when the airport can absorb more flights-O'Hare's two largest carriers also have financial muscles to flex. They generate the bulk of landing fees that pay for new runways at the airport.

But critics say the preference the carriers are asking Congress to endorse would keep low-cost rivals from expanding at O'Hare.

"If it would inhibit growth of other airlines, that's the real issue,'' says a spokesman for New York-based JetBlue Airways Corp., which started serving O'Hare last January with a handful of low-fare flights to New York and California. "It would only increase the concentration of the two large hub carriers at O'Hare.''

dominant duo

Some 84% of passengers boarding at O'Hare fly on United, American or their regional jet partners. Some argue the duopoly stifles fare competition at O'Hare.

After airline deregulation in 1978, business fares soared until discount airlines gained significant marketshare in the 1990s. "Compared with many other large airports in this country, O'Hare lacks true price competition,'' says Kevin Mitchell, chairman of Business Travel Coalition, a Radnor, Pa.-based advocacy group.

A House Transportation Committee report explaining a bill to revamp the Federal Aviation Administration-which recently passed the House and is pending in the Senate-says that "preference should be given to hub carriers'' as "new capacity becomes available at O'Hare.'' United and American are the only airlines operating hub-and-spoke route networks at O'Hare.

"This would ensure that before new entrants or other carriers were granted more capacity, we would be made whole again,'' an American spokeswoman says in an e-mail. A United spokeswoman says by e-mail that the airline supports the measure, but she declines to elaborate.

While not legally binding on the FAA even if the bill becomes law, the committee report language inserted by Rep. Jerry Costello, D-Belleville, chairman of the House Aviation Subcommittee, is meant to influence the agency.

"It's discouraging, very discouraging,'' says Edward Faberman, executive director of the Air Carrier Assn. of America, a trade group of discount airlines. "They do look at congressional direction. Hopefully, they'll ignore that one.''

congressional ally

Sen. Richard Durbin, D-Ill., supports Mr. Costello's initiative, but aides say it's too early to know whether he will seek to amend the Senate version of the FAA reauthorization bill to mandate a preference for United and American. Mr. Durbin has long supported the carriers getting first crack at any additional O'Hare flights.

The current flight cap rule favors new carriers, which get the first two additional hourly arrivals if the FAA determines more flights won't cause delays. After that, any carrier is free to bid for new arrivals, but it's a moot point: The FAA hasn't eased the limit on O'Hare flights since it was first imposed two years ago.

The city, for its part, wants more competition.

"It is in the best interest of the airport, and the city, to open up the competition at O'Hare to a larger number of airlines,'' says a spokeswoman in an e-mail.

Contact: pmerrion@crain.com

Copyright 2007 Crain Communications Inc.


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