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Declining corporate travel and industry changes have left O’Hare airport slow to recover from the pandemic

By the height of the busy summer season, the number of travelers passing through U.S. airports for the year had already hit the same levels as before the pandemic, a sign of how passengers remained willing to spend their money.

But traffic at O’Hare International Airport lagged.

The number of passengers passing through Transportation Security Administration checkpoints at O’Hare during the first seven months of the year remained at about 86% of pre-pandemic volumes, Chicago Department of Aviation data shows. And airlines scheduled nearly 14% less passenger space on flights out of O’Hare in the past year than they did in 2019, according to data from aviation firm Cirium.

Experts say O’Hare’s sluggish recovery from the pandemic, even as activity rebounds at Midway and other airports around the country, has been hobbled by shifts in the travel industry. One of the major carriers operating out of O’Hare — American Airlines — has begun focusing on other cities that are growing faster or that offer strategic advantages over Chicago.

Also affecting the Chicago market are sharp changes to business travel, long an economic driver for the city, as in-person conventions and meetings have lost their luster for many travelers. The departure of some corporate headquarters from the city has not helped.

The lagging traffic is a troubling trend for O’Hare, a key piece of the city’s economy and a hub in the nation’s air system. And it comes as the city inches forward on a massive overhaul of the airport.

The cost of the overhaul, backed largely by passenger and airline fees, has swelled to $12.1 billion, which the Chicago Department of Aviation says is partly driven by inflation and the addition of more projects at the airport. Still, airlines can be conscious of their costs at the airport, adding another consideration for O’Hare.

But the city’s aviation commissioner isn’t worried about the airport’s lag. Traffic at O’Hare is still growing year over year, and international travel is coming back particularly strong, with several airlines adding international flights, she said.

“We’ve always rebounded,” Chicago Department of Aviation Commissioner Jamie Rhee said in an interview with the Tribune. “People want to travel, and they will travel.”

O’Hare is not the only airport that hasn’t yet recovered from the pandemic. Analysts pointed to airports in major coastal cities like San Francisco and Atlanta that also did not hit pre-pandemic levels of passengers through the first half of the year, and said the industry has been buffeted by changing demand for business, leisure and international travel, and headwinds like staffing shortages.

At O’Hare, 41.8 million passengers passed through the airport between January and July of this year compared with 48.6 million passengers through July 2019. By contrast, TSA checkpoints nationwide handled 99.9% of their pre-pandemic volume during the same time.

Airlines were also scheduling fewer flights out of O’Hare, along with fewer overall seats for passengers. For the year ending in October, airlines had scheduled 24% fewer flights out of O’Hare than in 2019, according to a Tribune analysis of Cirium data.

Scheduled flights were down nationally, too, but by less: They were about 11% below 2019 levels. And despite offering fewer scheduled flights out of the U.S., carriers were providing about the same amount of seats for passengers, Cirium data shows.

One key piece of O’Hare’s slower return is an apparent pullback by American Airlines, which has traditionally been one of the airport’s two major carriers, but which analysts say seems to be shifting focus to other parts of the country. American scheduled fewer seats on fewer flights out of O’Hare so far this year than it did in 2022, even as United Airlines, O’Hare’s largest carrier, added capacity, the Cirium data shows.

American is not abandoning Chicago, but seems to no longer put the same strategic importance on the city that it did 15 years ago, before the carrier merged with US Airways and gained more hubs, said Henry Harteveldt, travel industry analyst and president of the Atmosphere Research Group.

American is instead shifting attention to growing cities like Charlotte, North Carolina; Dallas; and perhaps Phoenix, where it has far less competition than it does at O’Hare, Harteveldt said. Miami is also an important gateway to countries to the south.

An American Airlines spokeswoman said in a statement: “Chicago is an important hub for American and we are grateful for our long-term partnership with the City of Chicago and the Chicago Department of Aviation. We remain committed to working on a capital plan that will keep O’Hare competitive and enhance the customer experience in a prudent and cost-effective manner.”

Meanwhile, United Airlines, while not pulling back from Chicago, is investing heavily in its hub in Denver. In a June interview with travel blog Cranky Flier, Patrick Quayle, United’s senior vice president of global network planning and alliances, described Denver as “our fastest growing hub,” and “number two right after Chicago.”

He described Chicago in the interview as “stable.”

“Chicago is a great market,” he said. “It’s a great local market, but also the winters are pretty brutal and it’s a tough operating climate.”

In a statement, United spokesman Patrick Mullane highlighted United’s “expansive” operations at O’Hare. The carrier has more flights out of O’Hare than any other airline and is growing, flying 18% more passenger seats in and out of Chicago than in 2022, he said. United also recently opened a new 17,000-square-foot club, marking an investment in the airport, he said.

Still, as airlines face labor shortages, they are being increasingly strategic in their focus, said Hani Mahmassani, director of the Northwestern University Transportation Center. Often that includes a shift to the country’s South and West, to places where the population is growing — and that’s not Chicago, he said.

Chicago is losing potential passengers and companies that attract business travelers, he said, citing the recent departures of corporate headquarters like Boeing. Despite Chicago’s assets, which include universities and cultural destinations that attract tourists, the city is facing image challenges, and a sense that it’s more difficult to do business here, he said.

“There is a Chicago factor as both origin and destination,” he said. “Yes, it’s significant, but it’s no longer what it was.”

Business travel has been slow to come back nationwide, but Chicago might be especially hurt by the trend.

The city has traditionally had a healthy amount of convention and business travel. But as companies get more comfortable with virtual technology, look to rein in spending, and increasingly commit to lowering emissions, business travel is one of the first expenses to go, Harteveldt said.

A shift among major airlines away from smaller regional jets, Harteveldt said, and a staff shortage affecting those regional carriers still being used, could also be limiting the airport. Regional air traffic traditionally has made up a large share of O’Hare flights.

And the construction work taking place at O’Hare as the overhaul gets underway is making the airport less attractive to passengers and airlines for the time being, Mahmassani said.

The work includes a recently opened expansion of Terminal 5, a renovation of other parts of the terminal, and planned construction of a new Global Terminal and two satellite concourses to replace Terminal 2.

Mahmassani has flown internationally multiple times, and each time he returns to Terminal 5, the configuration to get out of the airport is different. Sometimes Global Entry is available, sometimes it’s not, he said.

“The truth is, as an airport, it’s regressing,” Mahmassani said. “It really is regressing. It’s a 1970s airport, and it’s not a 2020s airport anymore.”

Rhee, the airport commissioner, said rebuilding while the terminals are in use presents challenges, but is necessary.

“Looking at our counterparts, if we don’t invest in our facilities, we will not remain competitive,” she said.

The Global Terminal project that will replace Terminal 2 is just passing 30% designed, a key stage for a construction project, she said. Preliminary site work on the two satellite concourses nearby has already begun.

Asked if American or United had requested changes to the project to reflect potential changing needs in Chicago, and as the overhaul cost ticks up, Rhee said she was in frequent conversation with the carriers and was committed to continuing to work with them. The Chicago Department of Aviation would work to build facilities that would keep the airport competitive, she said.

Once complete, the project should improve efficiency for American and United, allowing domestic and international flights out of the same terminal, Rhee said. She dismissed concerns about the carriers’ commitments to O’Hare, saying United’s investments in Denver were not indicative of its commitment to Chicago and American has plans to add international capacity out of O’Hare.

Despite the impending construction, international travel has come back strong, Rhee said, as travelers industrywide this year sought out destinations across the Atlantic. The airport’s international traffic was at 91% of 2019 levels, she said.

Travel across the Pacific has been slower to return nationwide, as much of China remained closed to visitors after the pandemic, but Rhee expects international travel at O’Hare to continue to grow as interest in China and Canada now grows, she said.

Chicago’s location in the Midwest makes it a prime airport for connecting passengers, too, she said, which she expected to help the airport’s recovery.

“I think that we have great optimism in seeing full recovery again,” she said.

Rhee also touted Midway Airport’s recovery from the pandemic as a sign of Chicago’s strength.

Much smaller than O’Hare and dominated by Southwest Airlines, Midway is less subject to the pressures of changing demand for business and international travel. Passenger traffic at the airport was up 6% over 2019, with 12.7 million passengers traveling in the airport through July.

At O’Hare passenger traffic likely won’t affect the airport revamp, said Joseph Schwieterman, director of DePaul University’s Chaddick Institute for Metropolitan Development. The terminals desperately need to be overhauled. Very few “global cities” have airports with as few amenities as the soon-to-be-demolished Terminal 2, and United’s Terminal 1 fills with traffic, he said.

“Our older terminals have become more problematic, have become more dysfunctional, by the year,” he said.

Harteveldt agreed the terminal project is long overdue, recalling a trip to O’Hare in the spring. While he was stuck in the airport during a storm, water poured into the terminal through a light fixture, he said.

A more modern layout, designed to help people and planes move better around the airport, is sorely needed, he said. And, once complete, it could also convince American to refocus on O’Hare.

“The 1960s is great for retro fashion and TV series like ‘Mad Men’ or ‘The Marvelous Mrs. Maisel,’ and having a vintage car in your garage maybe if you’re into that,” he said. “But the 1960s airport terminal design is simply inadequate for the volumes of people that travel today, and especially for American and United with their hubs at the airport.”

The lagging passenger trends might not last forever at O’Hare. Airlines reassess their networks often, and can easily move airplanes around, meaning it wouldn’t be hard for American to refocus on O’Hare if it chooses to do so, Harteveldt said. And the presence of Southwest and budget airlines at O’Hare adds some competition to ticket prices at the airport that can benefit travelers, he said.

“The current state of O’Hare will not necessarily be the future of O’Hare,” he said. “Especially given the vibrancy of Chicago and the fact that it remains a major business market, a major convention market, a city with a lot of activity going on for leisure travelers.”

sfreishtat@chicagotribune.com

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