Virgin America has cancelled plans to begin service at Chicago’s O’Hare International Airport in early 2009 after it failed to strike deals to lease gates at the airport from other airlines.

“Chicago remains at the top of our list and we look forward to launching our service when a gate solution has been found at O’Hare,” San Francisco-based Virgin said in a statement, Friday. “However, given our immediate fleet plans, it will not be our next new city.”

Virgin would have been the first domestic carrier to enter O’Hare since JetBlue Airways began flying to Chicago in early 2007, providing the first tough, new competition to United and American Airlines on routes to California’s business centers. Virgin’s decision is a blow to O’Hare and city of Chicago officials, who are struggling to recruit new airlines to offset a drop in the airport’s operations, which threatens to lower city revenues. O’Hare capacity is down 23 percent for the fourth quarter from 2000 levels, according to OAG, with the deepest cuts falling over the past three months as carriers braced for an economic slowdown.

Rest of this here at Chicago Tribune

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