In this issue:
- PreCheck expansion raises questions
- Central planning London's airport capacity
- Battle over a second Atlanta airport
- More DHS mission creep
- Europe seeks to reduce airport subsidies
- News Notes
- Quotable Quotes
As a long-time supporter of the concept of risk-based security, and an early member of PreCheck, I am both pleased and troubled by its rapid expansion over the past year. TSA set what sounded like an impossible goal for 2013—to be screening 25% of daily passengers in PreCheck lanes by the end of the year. Including members recruited via airline frequent flier programs, members of Global Entry and the other CBP trusted traveler programs, and others admitted to PreCheck lanes (see below), TSA said it met that 2013 goal.
As 2014 begins, PreCheck lanes exist at 114 U.S. airports, and TSA's new program offering $85 memberships to non-frequent flier is under way, with dozens of enrollment sites in operation thus far, and several hundred promised later this year, both at airports and in various other locations. And TSA's PreCheck goal for this year is to be screening half of each day's air travelers by year-end.
The large increase in numbers is being accomplished in three ways. One is the paid membership program, which requires the applicant to fill out a form, be fingerprinted, and pay $85. Exactly what kind of background check those people are getting remains unclear, though the fingerprints would enable the same kind of FBI criminal history background check required for Global Entry members and for airport workers with access to secure areas. But because of the other two ways PreCheck is being expanded, I doubt that any such background checks are taking place.
The second approach is selecting travelers who have not applied and putting the PreCheck symbol on their boarding pass for a particular flight. It appears that this is done via a new TSA algorithm that combines airline travel history with the standard Secure Flight checks performed on all travelers to define such people as low-enough risk to give them a "free sample" of PreCheck processing. Many people have been surprised to find the PreCheck symbol on their boarding pass and then be directed by the document checker to the PreCheck lane.
But the third approach, called "Managed Inclusion," is the one I find most disconcerting. TSA is using some of its Behavior Detection Officers (BDOs) to watch people waiting in the regular screening lines, visually identify some of them as "low-enough risk," and invite them to shift to the PreCheck lane. There is no pretense of any kind of background check in these cases—just the unscientific hunch of the BDOs that the person appears to be low-risk.
Managed Inclusion raises serious security questions, since there is no checking of anything beyond the same Secure Flight check against watch list that is applied to every single airline passenger in the United States. Methods 1 and 2 are questionable enough, since it appears that neither involves a Global Entry-type background check.
And the practical result of methods 2 and 3 has been to overwhelm many of the PreCheck lanes with people who don't understand the rules, and who unpack bags and take off clothes as if they were in the regular lanes, holding up what used to be a very quick and efficient screening for actual PreCheck members. TSA's Ross Feinstein has explained that putting amateurs into PreCheck lanes is a "work in progress. Until we started adding more people to these lanes, we couldn't sustain 10-20 passengers using a PreCheck lane per hour." But that volume increase was going to occur anyway once TSA got the paid membership program up and running.
In addition, by using BDOs for Managed Inclusion, TSA has come up with something else for these basically useless employees to do. And it seems to have worked. Despite congressional outrage over the scathing GAO report on the ineffectiveness of the Behavior Detection program, Congress failed to reduce the BDO budget in the Omnibus 2014 appropriations bill just enacted.
The good news is that TSA appears close to approving one or more security companies to take applications and check the bona-fides of those seeking access to PreCheck. Each company would use its own algorithm, demonstrated to TSA's satisfaction to be effective at identifying low-risk travelers. This program, assuming TSA actually signs one or more contracts, would supplement the agency's fledgling enrollment sites, with the companies using their own approaches to marketing PreCheck to prospective customers.
Last month the Davies Commission released its interim report on UK airport capacity needs, with a final report due in 2015. The need for additional capacity has been evident for a decade or two, yet the report focuses on, at best, one additional runway by 2030 and perhaps another by 2050. It reviewed and all-but-rejected several proposals for scrapping Heathrow and replacing it with a greenfield airport in the Thames estuary, far from everyone and requiring vast new road and rail access to be built. And its two preferred options are adding a third runway at Heathrow or a second runway at Gatwick. It also made recommendations for a number of (mostly sensible) interim approaches to squeeze out more use of the existing London-area runways.
What especially strikes me about the report is its underlying presumption that it is the British government's job to decide how much airport capacity the country needs and where it should be located. This might have been defensible when the government owned all three major London airports via the British Airports Authority. But thanks to the Thatcher administration's privatization of BAA in 1987 and the more recent competition commission actions to break up the company's near-monopoly, southeast England now has three major investor-owned airports competing with one another: Heathrow, Gatwick, and Stansted. And they are joined by niche-market competitors London City and London Luton. So why not let the investors who now own each airport decide what business model makes sense for each to follow, and risk their own funds developing the capacity to match?
To my surprise, the only voice raised in support of this approach has been that of Michael O'Leary, the outspoken CEO of Ryanair, Europe's largest low-cost carrier. In an op-ed in the Daily Telegraph the day after the Commission's report, O'Leary said the government should let the market decide where to build airport runways. "Each of these airports should be given permission to build an additional runway whenever they choose to, subject only to normal planning consents." The underlying rationale for airport privatization is that airports are not inherently governmental, and can and should be investor-owned utilities. They should not be operated as a government-managed cartel.
To be sure, none of the local objections to noise and emissions would be any different if the UK government gave each airport permission to expand. Each would have to come up with a proposal that could obtain planning permission, minimizing and mitigating the negative externalities, just as U.S. airports must do when seeking to expand. The costs of doing so would be included in the cost of each expansion project, to be recovered from airport fees and charges. If only one of the three airports came up with a proposal that got to "yes," it would be rewarded for its skill in developing such a proposal.
The current UK airports policy is the opposite of what is required. Instead of allowing airports to develop and implement inherently costly expansion programs, it continues to impose price controls on these no-longer-monopoly airports, depriving them of the resources needed to expand. But simultaneously it taxes airport passengers at outrageous levels and pockets the money as a general revenue source. Last month the government increased its departure tax for the sixth time in six years. The tax on a flight to the USA in economy class is $113; premium cabin passengers must pay $226. Flights to the Caribbean incur a departure tax of $139 economy and $279 premium. Those are per-person; for a family vacation, multiply by the number of family members. And then, of course, there's the air fare.
British aviation policy needs a major rethink. Where are Adam Smith and Margaret Thatcher when we need them?
Since I wrote about the plan to bring commercial airline service to tiny Paulding County Airport (northwest of Atlanta) in the November issue, the battle over whether this will be allowed has escalated. Six residents who filed a lawsuit opposing commercial service agreed to a settlement lat month in the U.S. Court of Appeals. They dropped their suit in exchange for the airport agreeing to an environmental assessment by the FAA, but the decision also gave the airport permission to proceed with its current project to add a runway safety zone and widen a taxiway. The FAA assessment could take up to a year.
A news article in the Wall Street Journal (December 18th) headlined "Why Is Delta Afraid of This Tiny Airport?" highlighted that airline's outspoken opposition to any competition with its massive hub operation at Atlanta's Hartsfield-Jackson International Airport. In addition to comparing various statistics on the two airports (such as 203 gates compared with one), reporters Susan Carey and Cameron McWhirter included a table comparing the airports available in the top 10 US metro areas. New York and Los Angeles each have five airports; Boston, Miami, Philadelphia, and Washington each have three; Chicago, Dallas, and Houston have two apiece. Only Atlanta—second largest of the top 10—has but a single commercial airport. Yet we are expected to believe that a second airport "isn't commercially viable or economically sound for the region."
There have been two studies of this question in recent years. The first, largely funded by the FAA, was carried out by a consultant under the direction of the City of Atlanta Department of Aviation (somehow presumed to be a neutral party). Released in May 2011, it considered 29 possible sites, narrowing those down to eight for more detailed analysis (including the Paulding County and Gwinnett County airports). After estimating the costs of the eight candidates at between $1.4 billion and $2.9 billion(!), the report concluded that the benefits of a second airport would exceed its costs. The second study, carried out by a Georgia Tech group, found that three sites, including Paulding County, were acceptable sites for a second commercial airport.
The legal assault on Paulding County's plan has escalated considerably. A detailed report by the Associated Press identified four "heavy-hitting" law firms that have filed three lawsuits, submitted open records requests for numerous documents, taken depositions, started a website, and launched a nonprofit 501(c)(4) issue advocacy group. Paulding County officials say these efforts are being funded by Delta, but the evidence is circumstantial. Delta has been a client of three of the law firms, including McKenna, Long & Aldridge (which has created the advocacy group) and Sidley Austin, which filed the legal challenge over FAA approval. The attorney in the latter case is Peter Steenland, brother of Doug Steenland, former Northwest Airlines CEO during its merger with Delta.
Delta's pilots union has sent representatives to local meetings to argue against the new airport, alleging that having a second airport "will raise our cost of doing business, and when Delta sneezes Georgia gets a cold." AP also reports that a Delta pilot told a local meeting that he's concerned a second airport could "take away funding from Hartsfield-Jackson."
The only airline known to have shown interest in serving Paulding County Airport (now renamed Silver Comet Field) is ultra low-cost carrier Allegiant. I'm amazed that Delta finds this tiny airport and this very different niche carrier to be such a threat. And the plain fact that all other major US metro areas have more than one commercial airport suggests that Delta's expressed concerns are huge exaggerations.
Two branches of the Department of Homeland Security—Customs & Border Protection and TSA--have been conducting (or condoning) warrantless searches. Unexpected ramp searches of general aviation aircraft by CPB have aroused the Aircraft Owners & Pilots Association (AOPA). The second type of search, in which TSA has encouraged operators of valet parking at commercial airports to search cars parked there, has received far less publicity.
Over 40 GA pilots have told AOPA that they and their plane have been searched by Customs & Border Protection agents (or by local law enforcement acting at CBP's request). In September AOPA President Mark Baker met with Rep. Sam Graves (R, MO) to discuss the issue, which led to Graves requesting the Inspector Generals of both DHS and DOT to investigate these actions. Graves pointed out that no evidence of criminal activity has been found in any of these searches. Thomas Winkowski, acting commissioner of CBP, has responded that various federal regulations permit "any federal agent" to check pilot and aircraft documents as the basis for stopping, searching, and even detaining law-abiding GA pilots on domestic flights.
AOPA General Counsel Ken Mead cites an internal CPB memo that calls such searches "zero-suspicion seizures" as indicating that the agency has overstepped its bounds. "We don't object to law enforcement officers stopping and searching general aviation aircraft when they have a legitimate reason to do so—in other words, when they have probable cause or reasonable suspicion of illegal activity." But he adds, "It is our position that federal law enforcement officers have absolutely no authority to stop GA aircraft without meeting that legal standard." In a troubling sign that CPB has no intention of backing down, it has recently moved to reclassify the data in its Air and Marine Operations Surveillance System (AMOSS) to exempt them from the Privacy Act, which makes them unavailable to reporters, attorneys, and everyone else.
Stories also appeared in the media last year about a number of cases in which TSA-approved airport security plans call for inspecting every vehicle left in the care of airport valet parking. Shocked passengers at Birmingham, Rochester, and San Diego have complained about learning—sometimes via a card left inside the car—that the vehicle had been searched "under TSA regulations." Bob Burns of the TSA Blog Team responded to the initial outcries by trying to deflect attention from the agency itself to the airport's own security plan (which of course is worked out under the direction of the airport's TSA Federal Security Director).
The rationale for searching valet-parked cars is that such cars may be left at curbside, next to the terminal, for an uncertain period of time until the valet attendant drives them to the valet parking area. And that if a bomb were inside the car when next to the terminal, it could kill or injure many more people than if it went off inside the nearby parking structure. But many other vehicles linger for a while at the terminal curbside and could be an equally large threat—but they are not searched.
The underlying problem with both the GA aircraft searches and the valet parking searches is that they are done without probable cause and without a warrant. The Fourth Amendment supposedly protects Americans from such searches. In historical context, it was a huge change to "search" every single airline passenger before permitting him or her to proceed to the gate. But given what appeared to be the dire threat to aircraft and passengers exemplified by Al Qaeda, Congress and most Americans agreed to this exception to the Fourth Amendment. More than 12 years later, even mandatory screening of every passenger is looking like overkill. And searching private planes and passengers' cars without probable cause and a warrant is exactly the kind of DHS mission creep Congress should put a stop to.
After many years of spending about $4 billion per year on subsidies to airports, the European Commission is seeking to reduce and reform this subsidy program. Within the EU are 460 nominally commercial airports, only about 15% of which are profitable. These are mostly the 15% that have been partially or fully privatized over the past two decades. Some 87% of the 460 airports get taxpayer subsidies, pretty much coinciding with being state-owned. Of the 460, 71 handle more than 5 million annual passengers. Another 33 handle between 3 and 5 million. Some 275 airports handle fewer than a million passengers a year, and 185 of those handle fewer than 200,000 a year.
The European Union has rules on state aid, which is not supposed to be used in ways that distort markets. But at least 60 airports are currently being investigated for breaking those rules, and legal loopholes abound. The Economist calls the overall array of regulations "cumbersome, inflexible, and unenforceable," and even Ryanair CEO Michael O'Leary, whose airline has benefited extensively from subsidies to smaller regional airports, calls the current rules "lunatic" and has supported efforts to reform them.
The Commission last July proposed a significant overhaul and simplification. Airports with more than 5 million annual passengers (such as Ryanair base Charleroi in Belgium with 6.5 million annual passengers) would no longer get capital subsidies, on the grounds that such volume permits purely commercial finance. For smaller airports, the extent of aid will depend on passenger volume, with a higher fraction of capital costs eligible for subsidy at the smaller airports, and no capital subsidies for non-aeronautical facilities. And although operating subsidies are theoretically not allowed under current rules, they in fact are widespread. So the reform proposes to phase them out over a 10-year period, while restricting them to airports with less than 3 million annual passengers. The new rules would also permit airports under 3 million to give start-up aid to airlines for up to the first two years of new service.
The consultation period ended in October, and the final revised rules are due to be issued in the near future. Michael O'Leary, to many people's surprise, calls them "terrific," which may reflect his realization that the subsidization that has contributed to Ryanair's success was not sustainable.
Wrongful Inclusion on No-Fly List Must Be Remedied. A federal district judge in California ruled on January 14th that when the DHS errs in putting an air traveler on the no-fly list, it must provide a procedure for that name to be removed from the list. Because of the sensitive nature of the case, Judge William Alsup's decision is sealed until April, giving DHS time to appeal the decision. The case has dragged on for nine years before reaching this point in the legal process.
MIA's Airport City Drastically Scaled Back. The recently installed airport director of Miami International Airport has scaled back the ambitious plan to develop an Airport City on unused airport land. Instead of using 33.5 acres for commercial and retail purposes, the revised plan will be just 9 acres. The project was previously awarded to Brazilian-based Odebrecht USA, which has done other projects at MIA and elsewhere in Miami. But because its parent company has two projects under way in Cuba, the project has aroused political controversy. The final decision will be made by the Miami-Dade County Commission.
Increased US Access for Tijuana Airport. The New York Times has reported (January 19th) progress on an ambitious plan to enable U.S. air travelers to park their cars next to the border and walk across an enclosed 325-foot walkway to Tijuana International. The project is being led by Chicago investor Sam Zell. Even without this easy access, about 2.5 million U.S. travelers use the Tijuana airport, accounting for about 60% of its enplanements. Fares to destinations in Mexico are significantly lower than those from San Diego International, John Wayne, and LAX. The project is a joint venture of privatized Mexican airport operator GAP and Zell's Equity Group Investments. It has State Department approval and is negotiating with Customs & Border Protection for provision of checkpoints.
Gary Airport P3 Agreement Nearing Approval. The airport board of Gary/Chicago International Airport has reached agreement with its winning bidder on terms for improving and managing the airport. The team, led by Aviation Facilities Company and AvPorts Management has agreed to invest $100 million in the airport over the next 40 years, as well as operating and managing the airport. The airport board will hold a public hearing on January 27th to explain the plan, and is expected to vote to approve it shortly thereafter.
Spanish Ghost Airport for Sale. It cost €1 billion to develop, but the Ciudad Real airport—halfway between Cordoba and Madrid—is being auctioned off with the minimum required bid at €100 million. The airport was completed in 2009 as part of Spain's real estate bubble, and attracted only a handful of daily flights before being closed in bankruptcy in April 2013. It is one of a number of "ghost airports" in Spain.
CLEAR Lanes in Houston Integrated with PreCheck. Travelers at Houston Intercontinental who are members of both CLEAR and PreCheck can pass directly from CLEAR check-in to the PreCheck lanes in Terminals A and B, with similar integration "coming soon" to Terminal C.
Malaysia Company Buys 40% of Turkish Airport. Part-privatized Malaysia Airports Holdings has purchased 40% of GMR Group's equity stake in Instanbul Sabiha Gokcen Airport (ISG). The price, which also included LGN Tourism, was $309 million. ISG hosts 58 airlines serving 125 destinations.
SeaTac Airport Spared Minimum Wage Mandate. A judge of King County Superior Court ruled that the referendum approved recently by voters in the city of SeaTac does not apply to the airport itself, but only to businesses located elsewhere in the tiny city that surrounds and includes the airport. The reason for the decision is that the airport is owned by the Port of Seattle, which under state law has "exclusive jurisdiction" over the airport.
Aeroports de Paris to Upgrade Croatian Airport. A consortium headed by Aeroports de Paris and including construction giant Bouygues has won a 30-year concession agreement to modernize and operate the terminal at Zagreb Airport in Croatia's capital city. The consortium will invest €331 million in the project.
"TSA's new policy of randomly choosing unprepared travelers and directing them to PreCheck lanes once reserved for elite frequent fliers and members of CPB schemes such as Global Entry is troublesome, bordering on suicidal. . . . TSA seems intent on destroying the advantages of PreCheck by flooding its lanes with unvetted, unprepared, and uneducated travelers who have no idea what the program is about or how to use it. That's causing epic back-ups at PreCheck lanes, which until lately had been known for their speedy service and civilized screening procedures."
—Joe Brancatelli, "How the TSA Could Ruin PreCheck," The Business Journals, Dec. 12, 2013 (www.bizjournals.com/bizjournals/blog/seat2B/2013/12/tsa-expands-precheck-security-bypass.html)
"What can we learn from the British, Europeans, and others in terms of airport security and the flying experience? When Europe began confronting terrorist hijackings in the late 1960s, the initial approach often was to use government employees to enhance airport security. Then in the 1980s, European airports began developing a P3 [public-private partnership] model—government setting the security standards and airports carrying them out with private security companies. Many now follow this model, or look to Israel's airport security—recognized as the best in the world. What does it do well that we can take to our airports?"
—Rep. Bill Shuster (R, PA), Chairman, House Transportation & Infrastructure Committee, Speech before the International Aviation Club on the State of Aviation & the Next Aviation Reauthorization, Dec. 11, 2013
"[W]hat you are now seeing is development of a much more competitive airport market. And that then calls into question whether you need regulation, which is really designed for the constraint of monopoly. If you don't really have monopoly, what is the role of regulation? I think there's a case for saying that in general, you should avoid regulation and move much more, as in other sectors of the economy, to rely on competition law. But even when you have regulation, it needs to be much more strongly justified than in the past."
—Harry Bush, former Group Director for Regulation, UK Civil Aviation Authority, "Evolving Trends in Airport Regulation," Airport Public-Private Partnerships, LeighFisher, November 2013
"European airport capacity is like the statistician standing with one foot in a bucket of boiling water and one on a block of ice; on average, he feels fine. Europe has both an airport capacity crunch and a capacity surplus at the same time. We have lots of airports, just not where we need them. To argue that the State Aid rules help with the capacity crunch because you just never know when that white elephant airport might come in handy is disingenuous, to say the least."
—Andrew Charlton, "State Aid and Airports: Pork Barrel Meets Sausage Machine," Aviation Intelligence Reporter, October 2013