$1.1B Midway improvements promised under new ‘use agreement’
BY FRAN SPIELMAN City Hall Reporter email@example.com September 12, 2012 5:28PM
Updated: September 12, 2012 10:10PM
Airlines operating out of Midway Airport would make a minimum of $1.1 billion in capital improvements over the next 15 years — with the prospect of sharing $22.5 million in airport revenues — under terms of a new “use agreement” proposed by Mayor Rahm Emanuel at Wednesday’s City Council meeting.
Five years ago, Southwest Airlines demanded a share of profits generated by then-Mayor Richard M. Daley’s plan to privatize Midway Airport before signing off on the $2.5 billion deal, which subsequently fell through for lack of financing.
The airline also questioned whether a private operator could turn a profit — and lower airline rents and landing fees — without cutting back on maintenance and emergency services.
Southwest ultimately dropped its reservations after the city agreed to freeze “total airline fees” for the first six years and increase them by the rate of inflation after that.
The new agreement commits airlines servicing Midway to bankroll a minimum of $1.1 billion in capital improvements over the next 15 years, ensuring that the Southwest Side airport would “continue to grow and remain competitive.”
Emanuel has promised to make a decision on whether to revive the 99-year, $2.5 billion Midway privatization deal by Dec. 31 after asking the Federal Aviation Administration for a series of extensions.
The new, 15-year airline use agreement would not preclude a privatization deal, according to mayoral spokesman Tom Alexander.
“The two are not related. The Chicago Department of Aviation must continue its day-to-day operation of Chicago’s airports, which includes the ongoing negotiation of a new lease agreement at Midway, expiring at the end of the year,” he said.
Alexander noted that the revenue-sharing agreement is capped at $1.5 million-a-year or $22.5 million over years.
“If Midway operations come in under budget, the airlines would save money and a portion of that revenue would be returned to the city for use on capital projects,” he said.