O’Hare landing-fee hike riles airlines

Sharply increased landing and rental fees at O’Hare Airport have angered airlines, threatening the city’s airport expansion plans.

Airlines will be charged increases of 15 percent to 17 percent in rental rates and 38 percent in landing fees. The landing fee hike is being used to fund pre-payment of debt not scheduled to mature until after 2030, according to a Feb. 3 letter from United and American Airlines executives to Aviation Commissioner Rosemarie Andolino.

Airline executives say that unless the city’s Aviation Department agrees to reverse course on the pre-payment of debt, the airlines will not continue to discuss funding of Phase Two of the massive O’Hare expansion project.

“We believe these increases are steep, unnecessary and threaten the competitiveness of O’Hare, the City of Chicago and our companies,” wrote Kate Gebo, vice president of corporate real estate at United Airlines, and Laura A. Einspanier, who holds the same title at American in the Feb. 3 letter.

The executives also wrote that if the Aviation Department is going to “intentionally and unnecessarily” increase airlines’ cost, “we cannot consider any projects that will only exacerbate the situation.”

American spokeswoman Mary Frances Fagan said that in 2009, the landing fee was $4.91 per 1,000 pounds.

The “normal” expected increase would have been to $5.40 per 1,000 pounds, but the city raised the fee to $6.77 for this year, Fagan said. The increased debt service to be paid by airlines is $63 million, according to the letter. Most of this will be paid by United and American, the two largest airlines at O’Hare.

“It exacerbates the financial conditions that all carriers face today,” Fagan said.

The airlines have previously expressed reservations about the expansion project because of shrinking airline revenues.

Michael Boland, first deputy aviation commissioner, said debt service increases were anticipated as part of the 2003 expansion agreement. He said the department ”remains willing” to reach a runway funding agreement with airlines.