Sunday, November 27, 2005

Chicago O'Hare expansion: When government runs amok

This story has little to do with Houston, other than serving as a warning to make sure we never get this stupid. The Chicago Tribune recently ran a story on the plans to expand Chicago O'Hare airport. The planned project is absolutely staggering, essentially involving the near complete destruction and rebuilding of the airport over a decade or more, totalling to $19 BILLION dollars.
O'Hare handles about 2,850 flights daily. Chicago's plan to reconfigure intersecting runways into a parallel-runway design will allow about 500 additional flights each day by the end of the decade, Mineta said.

The FAA says the expanded airport could safely accommodate 1.2 million flights annually with a reasonably low level of delays.

O'Hare handled 992,471 flights in 2004, when it scored the worst on-time flight performance of the largest U.S. airports, "causing headaches and heartaches for countless travelers nationwide," Mineta said.

But the FAA cautioned that severe flight delays could return to O'Hare shortly after construction is completed, or when activity reaches 1.4 million flights annually.
So, at the end of the day, for $19 billion they will only get about 20% more capacity. But lets take the math a bit further. Over 30 years, that's about 6 million additional takeoffs and landings (200K x 30). Divide that into $19 billion, and you get a stunning $3,167 per additional flight - and that is without assuming any time-value-of-money interest on that capital cost (which is the same reason you pay about double the cost of your house over 30 years for your mortgage). Take that into account, and you can double it to over $6,000 per additional flight supported. Assuming an average of about 100 people per flight, that's $30-60 of additional cost per passenger on these new flights. This is in a world where average total ticket prices are $100-150 each way, and just a couple of additional passengers can make the difference between profit and loss on a flight. $3-6K is a unbearable burden on a single flight - which is of course why they won't - they'll spread it over every flight at the airport, not just the new ones.

Now, to show how incredibly unnecessary this boondoggle is, consider that over 50% of the passengers at O'Hare are not starting or stopping in Chicago, but just passing through transferring between flights. Those people could have just as easily transferred through Minneapolis, Detroit, Cleveland, or Cincinnati - or even Denver, Dallas, or Atlanta - among others. Most of those airports have plenty of capacity for growth, with absolutely no need to spend anywhere close to $19 billion dollars.

Really, this comes down to ego of Chicago politicians like Mayor Daley, who yearn to reclaim the #1 airport slot from Atlanta. A far cheaper and better alternative is a third airport south of Chicago in Peotone, but the city of Chicago wouldn't be able to control it or its patronage jobs and contracts. I can't believe American and United Airlines are going along with this plan (they both have hubs there, controlling over 85% of the flights). The additional costs will be put on their flights and passengers, making them uncompetitive for connecting flights (locals won't have much choice). The only good news in this mess is that the majority of the cost will be born by fliers in and out of Chicago rather than spread over federal taxpayers - so if you don't travel there it won't really be your problem. But that doesn't make it any less stupid.


At 9:46 PM, November 27, 2005, Blogger Mark said...

is its purpose only adding capacity?

At 10:38 PM, November 27, 2005, Blogger Max Concrete said...

DFW pulled a similar but less expensive bonehead move with its new $1+ billion international terminal. DFW now has excess gate capacity with the threat of losing business to Love Field if Love Field is opened up.

The smarter move for the DFW region would have been to open up Love Field, allowing some of the smaller carriers to move to it. That would have freed up space a DFW where a far less costly renovation could have gotten the job done.

The excess capacity at DFW is one of the reasons DFW Airport is fighting so hard to keep Love Field restricted. This drives up costs for consumers, who will ultimately have to pay for the new terminal. Basically, American Airlines and DFW Airport need restrictions on Love to support their bloated cost structures.

At 9:35 AM, November 28, 2005, Blogger Tory Gattis said...

> is its purpose only adding capacity?

Essentially, yes.

At 11:23 PM, September 21, 2008, Anonymous Anonymous said...

adding capacity yes. however, it will also cut down delays by at least 70%. the problem is that 5 of the 6 runways intersect. therefore, takeoffs/landings are tricky. the new runways won't intersect allowing it to be safer and more timely arrivals & departures (vs being queued)


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