O'Hare has own money troubles

With continuing black clouds for the aviation industry, Chicago's best hope for cash to complete modernization of O'Hare International Airport could come from outside sources, experts say.

In a recent letter to American and United airlines, Chicago officials said the city is already developing a Plan B that could involve third-party financing if the two carriers aren't on board with funding for remaining airport improvement projects.

"It looks like contingency planning is moving ahead full-steam," said Joseph P. Schwieterman, director of the Chaddick Institute for Metropolitan Development at DePaul University.

The city has identified revenue for Phase One of O'Hare modernization -- $2.9 billion out of a total of $6.6 billion for the entire concept -- through government grants, airline and ticket fees and bonds.

But how to pay for the second phase, which includes runway construction and a western terminal, is raising concerns. Already, costs of the work have risen to more than $8 billion.

With skyrocketing fuel costs, most airlines are in financial straits, with United announcing increased fares last week and American deciding Tuesday to cut routes from Chicago to Buenos Aires and to Honolulu to save money.

"What's happening is the airline financial situation is becoming increasingly dire," Schwieterman said. "It's impractical to expect the airlines to provide significant up-front cash."

"I do think for Phase Two, creative financing will be critical, whether it's from private leasing of terminals or a heightened user fee for the airlines."

Northwestern University Transportation Center expert Aaron Gellman noted that "there's a great deal of money out there" to be invested in public infrastructure.

"Look at the enthusiasm over the long-term lease on Midway," he said, referring to the city's review of proposals from private companies seeking to operate Chicago's second airport.

"As an example, the west terminal might be subject to private financing," he said.