American Airlines refuses to sign lease in $8.5 billion O'Hare expansion, citing 'secret' extra gates for United

Key Points
  • American Airlines said a deal to expand O'Hare included a 'secret provision' that benefits United.
  • United denies those allegations.
  • The airport is a major hub for American and for Chicago-based United.
American Airlines planes and passengers at the O'Hare International Airport, Chicago.
Getty Images

American Airlines said it won't sign its lease for a revamped O'Hare International Airport in Chicago, alleging its competitor and fellow tenant United Airlines would receive additional gates under a "secret" provision.

United denied those claims.

Chicago Mayor Rahm Emanuel said Wednesday that the eight-year project would include a new international terminal and remodeling of others. The $8.5 billion expansion, the largest in the airport's history, aims to increase gate capacity at the airport by a quarter. The airport had 184 gates as of January, according to its website. Airlines would contribute to the project through landing fees, terminal rent and other fees.

Emanuel's office did not immediately respond to a request for comment over the dispute.

The airport is the third busiest in the nation by passenger traffic. United and American are top two tenants, respectively, and the feud is raising questions about the airport's overhaul.

American said it is exploring its next steps and that it wouldn't sign the lease in "its current form because of a secret provision, inserted at the last minute, awarding additional gates to United."

The "United gate deal creates a clear winner, United, and clear losers: namely, competition, Chicago travelers and American Airlines," the statement said.

United fired back calling American's complaint "disingenuous" and said that the plan for the gates dates back more than a year.

"This was not a backroom deal," said Gavin Molloy, United's vice president for corporate real estate and environmental affairs.

The airline said the agreement for the gates was made more than 18 months ago.

"American has been aware of our agreement for over a year and has worked to block the implementation at every opportunity," a United spokesman said.

American said it would compromise: It would sign the lease without the provision. The airline, the world's largest, said it urged Chicago officials to build three additional gates for American to "re-level playing field."

Both airlines are trying to expand and access to gates is key to serving new cities or offering more frequencies.

Those five gates could mean "30 or 40 flights a day," said Henry Harteveldt, a travel analyst and founder of consulting firm Atmosphere Research Group. "I understand why American wants to get some additional gates to make sure they're competitive."

The most important thing is whether there will be sufficient competition in the new airport, Harteveldt added.

"When you stifle competition you offer consumers fewer choices and ultimately higher airfares," he said.