The Federal Aviation Administration last week said it would lift flight caps at O’Hare International Airport later this year after Chicago opens the first new runway as part of a $7.5 billion expansion plan.

Mayor Richard Daley and Robert Sturgell, acting administrator of the FAA, made the announcement at O’Hare. “Flight caps limit economic growth for the region and if left in place, serve as a disincentive for future investment at the airport,” Daley said. “Flight caps also negatively impact travelers by artificially constraining the market, leading to higher fares and fewer choices.”

The FAA imposed the caps in 2004 to combat delays and congestion at O’Hare that were impacting the national air traffic grid. The new runway opens in November. It’s the first new one at the airport since 1971. A second project, the extension of an existing runway, will open in September.

“The city of Chicago has outdone itself when it comes to boosting capacity,” Sturgell said. “I can’t say enough about how this is an example for the rest of the nation when it comes to dealing with capacity, congestion and delays.”

The reconfiguration of O’Hare’s seven runways and construction of new ones should reduce average delays of more than 20 minutes to about five minutes and add the ability to handle an additional 300,000 flights. The airport currently manages a little less than one million flights annually.

The first phase of the runway plan — which originally had a price tag of $2.9 billion but has grown by $400 million due to construction delays — relies on $1.6 billion of general airport revenue bonds, $659 million of bonds backed by passenger facility charges and general airport revenue revenues, the use of PFCs on a pay-as-you-go basis, and $330 million in federal grants. Overall, the total runway plan loosely relies on $4.43 billion of GARB borrowing, $1.6 billion of PFC-backed debt, $752 million of third-party financing, and $677 million of federal aid and other pay-as-you-go funds.

The number of flights at O’Hare is significant in that landing fees help make up general airport revenues that secure GARBs. Chicago earlier this year sold nearly $900 million of new-money and refunding O’Hare-related debt that provided some funding for the ongoing runway projects. The city has refunded hundreds of millions of dollars of outstanding O’Hare debt, pushing out repayment to shed about $100 million in interest rate costs in the near term for the fiscally struggling airlines.

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