The airline alleges that Chicago officials made false statements regarding negotiations with United.
American Boeing 737 at O’Hare (Photo: Shutterstock | Nate Hovee)
American Airlines has sued the city of Chicago over the allocation of gate space at O’Hare International Airport. The legal action, filed in a federal court in Illinois on Friday, centers on a dispute over the premature redetermination of gate assignments that American claims violates the terms of the Airline Use and Lease Agreement (AULA).
The lawsuit reveals the intense competition between the two major carriers at O’Hare: American and United. According to court documents, United, as the slightly larger hub operator, has “long sought to marginalize American” with aspirations to become the sole hub carrier at the airport. United’s CEO has publicly stated that “it’s hard to be kind of global and comprehensive [as a premium airline] if you can’t be number 1 in big cities,” including Chicago.
United’s ambitions are further evidenced by public statements indicating the company’s desire “to grow incredibly, and to someday take over those gates that currently have the AA [logo] on them,” American alleges.
At the heart of this lawsuit is the AULA, signed in 2018 by American, other airlines, and the city of Chicago. This agreement led to historic multibillion-dollar investments to improve O’Hare and established mechanisms for fairly distributing gates among American, United, and other airlines serving the airport.
The AULA contains several interworking provisions that govern how gate space at O’Hare is allocated and redetermined. Sections 5.3 and 5.4 specifically outline the processes for redetermining common use gate space and preferential use gate space, respectively. Section 5.3 stipulates that by April 1 of each year, the city must determine and provide written notice of gate space allocations to be effective on Oct. 1 of the same year.
The current dispute centers on United’s request for a gate redetermination that American contends is premature under the AULA. If completed, this redetermination would allegedly cause United to gain gate space while American loses gates, violating the terms of the AULA and inhibiting American’s continued growth at O’Hare.
American argues that the AULA established a “Gate Space Ramp-up Period” that would only begin after completion of specific construction projects, including the expansion of Terminal 5, Delta’s relocation from Terminal 2 to Terminal 5, and the opening of three new gates adjacent to American’s existing operations in Terminal 3 (the “L-Stinger Expansion”). According to the agreement, the city would be prohibited from initiating a gate redetermination for at least one year during this ramp-up period.
The court documents show a contentious negotiation process leading to the AULA. During extensive negotiations throughout 2017 and early 2018, parties held sessions at least every other week, with additional monthly “high level” meetings between city officials and senior executives from American, United, and Spirit.
American aircraft at O’Hare (Photo: AirlineGeeks | Greg Linton)
A pivotal moment occurred on Feb. 15, 2018, when city officials presented a “final lease proposal” during the last high-level meeting. American alleges that at the very end of that meeting, officials presented revised language that essentially resurrected a previously abandoned proposal from August 2016, awarding five contested gates to United for its preferential use and designating three others as common use at a location impractical for American to access.
Section 5.2.4 of the AULA stipulates: “Upon the completion of the T-5 Extension and the relocation from the Main Terminal to Terminal 5 of one or more Long-Term Signatory Airlines (‘Relocating Airlines’), the City shall allocate Linear Frontage in accordance with Exhibit D-1.3 with such assignments to remain in place for a period of at least twelve (12) months (‘Gate Space Ramp-up Period’).”
This provision is central to American’s complaint. The airline argues that this Gate Space Ramp-up Period was specifically designed to ensure all airlines had the opportunity to use newly constructed gates for at least one full year to establish a pattern of service that would inform future redeterminations.
American’s complaint further alleges that city officials made false statements about their negotiations with United. While officials initially claimed they had made changes unilaterally without conferring with any third party, United subsequently issued a public statement explaining that “[its] agreement with the city for five additional gates was made more than 18 months ago.”
American claims it was “deceived and betrayed” by this apparent backroom deal between United and the city. The airline made its objections public, stating that the city’s favoritism “undermine[d] competition and consumer choice” at O’Hare, and announced it would not sign the AULA in its then-proposed form.
The airline continues to bolster service from O’Hare, even after a recent proposal to shift more gates to United. Last week, American added a batch of new and returning routes from Chicago, and it bolstered frequencies in other markets this winter.
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