OHare Modernization Program

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OHare Modernization Program
Prepared by Jon F. Ash, President InterVISTAS-U.S
. 1800 K Street, NW Suite 1104 Washington, DC
20006 (202) 457--0212
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OHare Modernization Program

• Background
• Program Economics
• Economic Impact of OMP
• Conclusions

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OHare Modernization Program
OHare Capacity to Handle Demand Is Limited By
Airspace Physical Plant Constraints
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OHare Modernization Program
American and United Dominate OHare, But Face
Severe Financial Constraints
American and United Financial Performance ( in
Millions)
AA UA Majors Loss 57.1
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OHare Modernization Program
The City Proposes A Solution to the OHare
Capacity Problem

• Will cost 6.6 billion
• Will increase passenger enplanements to 46.2
  million in 2012
• Will be financed by
• AIP
• PFC
• GARBs
• Third-Party Financing
• Will increase cost/passenger to airlines from
  9.24 in 2003 to 20.19 in 2012

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OHare Modernization Program
City Traffic Projections
OHare Activity and Cost Forecast
2012 G/(L)

• Overstated
• Impliedly attributes increases to OMP

1/ Assumes 10 growth in seats/departure and 15
growth in passengers/departure 2/ Departures are
forecast to growth to almost 15, the amount by
which all activity could grow assuming that 1.1
million departures per year is feasible.
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OHare Modernization Program
Capital Requirements Are Underestimated
City OMP Capital Cost 6.6 billion
More Likely Capital Cost 1/ 2004 Dollars
1/ 12.8 billion Nominal Dollars 14.7 billion
1/ Includes only airfield OMP - 7.2 billion WGP
- 3.0 billion Contingency Overrun - 2.6
billion
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OHare Modernization Program
Citys Financing Assumptions Are Faulty
Source of Funds Percentage of Total
9 20 60 10
AIP PFC GARBs Third Party
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OHare Modernization Program
City Cost Assumptions Are Aggressive
ga2 Adjusted Forecast of OMP Base Data
2012
3/ Passenger growth to reflect historical
trend 4/ Assuming no increase in PFC
1/ City estimate per OHare Master Plan Table
V11-9 2/ Retail adjustment to reflect historical
growth
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OHare Modernization Program
The City Overstated Economic Benefits by Roughly
150
Economic Impact Generated by the OMP
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Conclusions

• Projected increases in traffic are not attainable
  (increases only partially due to OMP)
• Capital cost of program is at least 15 billion
• Project difficult, if not impossible, to finance
• If OMP is financed, airline costs would almost
  triple
• The projected economic impacts a fantasy. Many
  businesses and jobs could be lost.
• THIS DOG WONT HUNT!

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IT MAY BE CUTE, BUT IT WONT HUNT!
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OHare Modernization Program
Prepared by Jon F. Ash, Managing Director Global
Aviation Associates, Ltd. 1800 K Street, NW
Suite 1104 Washington, DC 20006 (202)
457--0212 www.ga2online.com