RESEARCH Business Transportation

AIRPORTS & DEVELOPMENT
Building Peotone Airport would benefit travelers and economy

Mark Reutter, Business Editor
(217) 333-0568; mreutter@uiuc.edu

7/1/2000

CHAMPAIGN, Ill. -- Building a new airport at Peotone, rather than expanding O'Hare Airport, could save travelers $500 million a year and spur economic development in the state, a University of Illinois economist says.

Robert Resek of the UI Institute of Government and Public Affairs estimates that an airport at Peotone, 40 miles south of Chicago's Loop, would reduce air fares by introducing "real competition" among airlines. This is not likely to happen even if O'Hare is expanded, as proposed by the city of Chicago, because it is so heavily dominated by two carriers, United and American.

"Until recently, United and American operated 89 percent of domestic flights out of O'Hare," Resek wrote in the current issue of Economic Edge, a newsletter on policy issues facing the state. "Economists have long understood that fortress hubs like O'Hare lead to higher airfares for traffic originating or terminating at the hub."

O'Hare is already at peak capacity. Using different statistical assumptions, two recent studies found that air users at O'Hare paid a 7 percent premium ($280 million annually) and a 33 percent premium (more than $1.3 billion annually) for what amounts to flight rationing at the most popular hours of travel.

Although government airport restrictions, known as slot controls, were recently lifted at O'Hare, competition among private air carriers is still limited by the lack of available gates and runway access, according to Resek. "Real competition from a different airport will make a real difference in the prices we pay."

In addition to increased air competition, an airport at Peotone "will make air travel much more convenient for those who live or work south of the Loop, along with many who live farther downstate. Expansion of O'Hare will merely focus on connecting travelers and current users of the facility who already have extensive service."

Peotone would probably cost little more -- and perhaps less -- than proposed capacity increases at O'Hare, especially when figuring in new roads and other infrastructure needed for either project, Resek said. Scaled-back plans for Peotone call for a one-runway airport with one terminal and 12 aircraft gates.

A third Chicago airport at Peotone was first proposed a decade ago by Jim Edgar, who was governor at the time, and has won the endorsement of Gov. George Ryan. But Chicago Mayor Richard Daley is adamantly opposed to the idea and wants to use federal and city money to add more aircraft terminals -- but not more runways -- to O'Hare. Smaller Midway Airport also would be improved.

"Consumers of air travel have been forgotten" in all the political maneuvering, Resek said. He characterized statements by the airlines now using O'Hare that they would not fly into Peotone as a red herring. "If it's built, the airlines will use it."