In this issue:
- Who Should Run Airports?
- ACLU Curbs TSA Mission Creep
- Comprehensive Airport Operations Software
- Liquids Ban Still With Us
- Technology Upgrades Airport Parking
- NORAD Doing Aviation Security Risk Assessment
- News Notes
- Quotable Quote
Airport Ownership Form Really Does Matter
What difference does it make who owns and operates an airport? Economists and management consultants theorize that it should make a difference to airport performance, since different owners would pursue different goals and operate under different incentives. One of the best studies to examine this question empirically came out last year in the Journal of Urban Economics. Tae Oum, Jia Yan, and Chunyan Yu’s paper is “Ownership Forms Matter for Airport Efficiency: A Stochastic Frontier Investigation of Worldwide Airports.”(http://dx.doi.org/10.1016/j.jue.2008.03.001)
Oum and his colleagues used a data set of 109 airports of a variety of sizes and types. Of those in the 2004 sample, 27 were owned and operated by a city or state government, 25 by a U.S. airport authority, 16 had majority or totally private ownership, 12 were public-sector corporations, 7 were owned by U.S. port authorities, and 12 had mixed ownership.
Nearly all previous studies of comparative airport performance have largely ignored the ownership question, according to the authors. In addition, their analysis used a broader set of inputs and outputs than previous studies to measure airport efficiency. The econometric technique they used is called the stochastic frontier method. It’s similar in principle to the “production possibilities frontier” you may remember from Economics 101-that any firm or agency has an optimum (cost-minimizing) set of outputs (the frontier), but may fail to achieve it due to various inefficiencies and constraints. The paper’s math is beyond me, but assuming they are competent econometricians, let’s focus on what their analysis found.
First, airports in the categories of (a) private (or majority private), (b) public corporation (corporatized), and (c) airport authority are more efficient than those with various forms of majority or 100% government ownership. Second, among those with the four different types of government ownership, the least efficient are those owned by U.S. port authorities. Third, in those metro areas with multiple airports, efficiency is lower when those airports are government-owned, but not when they are owned by any of the corporate forms.
Based on these results, the authors reach the following policy conclusions:
- Countries considering airport privatization should transfer 100% (or at least a majority stake) to the private sector and should avoid mixed ownership with a government majority;
- The Unites States should reconsider ownership and management of airports by port authorities; and,
- Although the efficiency of airports directly owned by city and state governments is lower than that of airport authority airports, the difference is not statistically significant. Hence, further research on this aspect is called for.
ACLU Curbs TSA Mission Creep
The phenomenon of mission creep is well-known among government agencies. Established to perform one function, the agency may decide on its own to expand into related or other areas, sometimes without any authority to do so.
I have written before about this danger as it relates to the Transportation Security Administration. The TSA was set up in the wake of 9/11 not as a generalized police agency but solely and specifically to guard aviation against threats from terrorists. Its legal authority to search travelers is based on a narrow exception to the Fourth Amendment (at least as interpreted by Congress) that it is not an “unreasonable” search to require travelers to pass through metal detectors or be searched for weapons or explosives prior to boarding a plane.
But some TSA screeners have expanded their mission, conceiving of themselves as general law enforcers. An example of that behavior took place at Lambert-St. Louis International Airport last March. Steve Bierfeldt was detained at a checkpoint after he sent a metal box containing $4,700 in cash and checks through the X-ray machine. TSA and local police officers spent about half an hour aggressively interrogating him about why he was carrying so much money-the audio of which Bierfeldt recorded on his iPhone. It turns out Bierfeldt, an aide to Rep. Ron Paul (R, TX) was carrying the cash as part of his duties with the Campaign for Liberty, an offshoot of the Ron Paul for President campaign.
Several months later, the American Civil Liberties Union sued the TSA on Bierfeldt’s behalf. “We had been hearing of so many reports of TSA screeners engaging in wide-ranging fishing expeditions for illegal activities,” the ACLU’s Ben Wizner told the Washington Times. One example he gave was TSA screeners reading the labels on prescription bottles to see if the patient name matched the name on the passenger’s boarding pass.
The good news came this fall, when the TSA issued two directives telling officers that “screening may not be conducted to detect evidence of crimes unrelated to transportation security” and that large sums of cash do not meet the threshold as suspicious for reasons of aviation security. In response to those directives, the ACLU announced last month that it was withdrawing its lawsuit. Although the existence of the directives is now public knowledge, TSA has not published them, and says it will not release them unless someone files a Freedom of Information Act request.
That last point suggests that TSA may have acted under duress, rather than understanding that its screeners had overstepped their bounds. So I think we must all remain vigilant over possible further instances of TSA mission creep.
More Examples of Comprehensive Airport Operations Software
Several months ago I wrote about Sensis Corporation’s Aerobahn software-a web-based airport operations tool that can provide real-time information on aircraft and ground vehicles on and near an airport, based in part on multilateration data. Competitor Era Systems Corporation is offering its own web-based airport software-a family of applications called AirScene. The newest application-AirScene.com Symphony- was introduced in October. Symphony competes with Aerobahn for airport surface management.
Two other Era applications have been purchased by airports in recent months. AirScene.com Noise & Operations Monitoring System (NOMS) allows airport neighbors to enter noise complaints online, while collecting data about the nature, frequency and location of such complaints. The software correlates aircraft identification and flight track data to determine the likely source of each noise complaint. It has recently been installed at both Reagan National and Dulles International Airports, and has just been selected for Bradley International Airport near Hartford, CT.
Another application is AirScene.com RevenueVue, a system that automates flight tracking and billing, while also providing audit capabilities. Most airports rely on airline self-reporting of flight activity in order to bill for landing fees. RevenueVue automates this process, making billing faster, less labor-intensive, and more accurate. The Port Authority of New York & New Jersey in October began operating a module called Itinerant Aircraft Billing (IAB) at Kennedy, LaGuardia, Newark, and Teterboro Airports, for all non-airline flight billing. Era installed its own multilateration system to generate the flight-tracking data for revenue billing at these airports.
These kinds of technologies offer a host of possibilities for improved airport operations. They also give us a foretaste of the coming NextGen environment.
Liquids Ban Will Be with Us a Few More Years
Last fall the media in both Europe and the United States carried optimistic stories that the end of the hated carry-on liquids ban was in sight-by the end of 2009 in the USA and sometime in 2010 in Europe. These predictions (from senior aviation security officials) were based on the rapid replacement of pre-9/11 two-dimensional checkpoint X-ray machines with advanced-technology, multi-view machines, such as the Smith’s Detection aTiX and comparable products from Rapiscan. Unfortunately, things don’t look that promising one year later.
The problem seems to be two-fold. First, neither the European Union nor our TSA wants airport-by-airport lifting of the current restrictions; that would be too confusing to air travelers. So that means the ban cannot be lifted in either jurisdiction until all airports are equipped with the new machines at all checkpoints. And because funds are tight all over, that is taking longer than originally hoped. Second, the new-generation X-ray machines are considered reliable enough to detect dangerous liquids only if they include advanced software to distinguish substances by atomic weight-and that software is still being tested by TSA and European agencies, with no certain deadline for approval.
So the latest word from the TSA is that maybe by sometime late next year all U.S. airports will be equipped and large liquids would be permitted in carry-ons-though at first they would have to be removed (as laptops have to be currently) until the software is considered foolproof. But TSA is not giving out any firm deadlines.
In Europe, because some countries are lagging behind in upgrading their checkpoints, the revised timetable drafted in November by the European Commission’s air security committee calls for retaining the current liquids ban until April 2013. The final proposal will be sent to the European Parliament, which will have three months to consider it-and is widely expected to approve it.
Canada, meanwhile, has ordered 150 Smith’s aTiX machines for installation by February, in time for the Vancouver Olympics that month. That number of machines will upgrade about one-third of all the checkpoint lanes at Canadian airports. Thus, there is unlikely to be a change in carry-on liquids policy in Canada next year, either.
Technology Is Upgrading Airport Parking
One of the most important sources of non-aviation revenue for airports is parking. And within the overall parking industry, airports are considered one of the premium markets. So it’s surprising that more airports don’t do a better job of managing their parking, especially their close-in parking structures.
A Washington Post article last summer (Aug. 30th) had the paper’s Answer Man investigate the parking information system at Dulles airport, which a reader had said posted wildly inaccurate numbers of available spaces on its variable message signs. The Answer Man (John Kelly) did some on-site investigation to confirm considerable inaccuracy and then interviewed airport parking people to find out how the system operates. Turns out this is the kind of low-tech system I’ve seen at several other airports. It uses induction loops in the concrete at the entrance to each level of the parking structure. Every night, parking staff do a manual count of occupied spaces on each level, to provide starting counts for the next day. Thereafter, a very simple computer program adds and subtracts as cars cross the loops-leaving all sorts of opportunities for error.
The high-tech approach is called a parking guidance system. It employs a sensor over each and every parking space that is routinely interrogated to determine if the space is occupied or empty, providing a highly accurate real-time count. And a light above each space shines red if it’s occupied and green if it’s vacant. The Answer Man discovered one nearby, at BWI Airport in Baltimore. That one, called SignalPark, cost about $600 per space to install. Sounds like a lot, but considering that parking structure spaces cost about $25,000 apiece to build, the technology adds only 2.4%.
Airport Business (October 2009) reported on another high-tech system called Intelligent Parking, in operation at the O.R. Tambo International Airport in Johannesburg, South Africa’s largest airport. It not only identifies vacant spaces; it provides guidance directly to the nearest one. Variable message signs begin alerting drivers when they are still on the freeway approaching the airport, and additional signs point the way to a vacant slot at every decision point. Intelligent Devices’ Peter Ashley says the cost of the system, which was as high as $500/space, is down to as low as $350/space in some applications.
At Tambo, Ashley says the system has cut the average time to park from eight minutes to two and a half. The reduced cruising-around time has cut vehicle emissions proportionally. In addition, because people arrive in the terminal earlier and more relaxed, they may spend more money at airport retailers.
One other difference between the low-tech and the high-tech systems is the potential difference in parking revenue. Ashley told Airport Business that “Some airport vehicle counting systems are so inaccurate that officials close parking bays that are only 85-90% full. The airport then loses the potential revenue that could be gained by filling up those bays.”
Risk Assessment of NORAD Aviation Security Efforts
After calling repeatedly for U.S. aviation security policies to be subjected to serious risk assessment, I’m pleased to report that one such effort is actually underway-though it’s outside the purview of the Department of Homeland Security. The review is being carried out by the North American Aerospace Defense Command (NORAD), the U.S./Canada air defense operation.
After 9/11, NORAD began regular air patrols above American cities, which lasted until 2007. But still in place are policies keeping U.S. and Canadian fighters, tankers, and radar planes on alert and sometimes scrambled in response to suspicious air activity. The New York Times article on which I’m basing this story (Nov. 20, 2009) reports that there were more than 1,000 such incidents in 2008, of which 400 required a NORAD response-sometimes just putting planes on alert, but sending planes aloft in more than 200 cases.
Partly in response to a GAO critique that the command had not conducted risk assessments of these activities, NORAD commander Gen. Victor Renuart has ordered a thorough reassessment of the threat of airborne terrorism. That seems well-justified, given that a whole array of costly measures (hardened cockpit doors, air marshals, passenger and baggage screening, etc.) remains in place to keep terrorists and weapons from bringing down commercial planes. Maj. Gen. Pierre Forgues, NORAD director of operations, told the Times that the review will look at scenarios different from 9/11, including different modes of attack and different types of targets.
This is the kind of assessment that DHS and TSA should be carrying out on costly programs such as air marshals and much of the airport screening program. I’m glad to see NORAD setting the pace for asking “how much is enough?”.
News Notes
Making International Registered Traveler Permanent
The Department of Homeland Security published a notice in the Federal Register on Nov. 19th, announcing plans to convert its Global Entry pilot program into a permanent feature available at US airports with international service. In tests over the past year, Global Entry reduced average wait times for returning air travelers by 70%, with most being processed in less than five minutes. Prospective members must apply, submit to a background check, and pay a $100 fee. If they pass the background check, they receive a biometric card to verify their identity, and can use self-service kiosks rather than standing in long lines to clear Immigration. There were 27,000 members as of mid-November.
New York Airport Delay Initiatives Lagging
Back in December 2007, the Aviation Rulemaking Committee tasked with addressing congestion at the New York metro area airports rejected runway pricing and instead developed a list of 77 action steps aimed at reducing delays. Although the FAA says it has completed 30 of them, the DOT Inspector General’s office finds that most of the 30 are either not used or seldom used. So far only five have proved useful, nine are used only in limited cases, and another 13 need more work; three have been discontinued due to airline concerns. (www.oig.dot.gov/item.jsp?id=2556)
Atlanta General Aviation Airport Privatization?
Gwinnett County, Georgia, part of the huge Atlanta metro area, has received an unsolicited proposal from a thus-far unnamed company to purchase Briscoe Field, a thriving general aviation airport near SR 316 in Lawrenceville. The company’s proposal calls for the county government to apply for permission to privatize the airport under the FAA’s Airport Privatization Pilot program. County Commission chairman Charles Bannister told TalkGwinnett.net that “It’s an intriguing idea that could bring in much-needed revenue for the County,” but added that the County government will have to study the idea before deciding whether to apply for the program. If they proceed, the process will include public comment and a competitive bidding process. The Pilot Program reserves one of its five slots for a general aviation airport, and that slot remains unused.
Belly Cargo Security Not There Yet
Though under congressional mandate to screen all cargo transported on passenger planes by next year, the TSA “has not been effective” in getting airlines and freight forwarders to comply with its security rules for handling and transporting such cargo prior to its loading onto airliners. That’s the finding of the Department of Homeland Security Inspector General’s office, in an audit released late in November. OIG investigators were able to gain access to supposedly secure facilities and walk around unchallenged. And some personnel lacked the required background checks or training. TSA’s inspection process “has focused on quantity rather than outcomes and ensuring corrective actions.” As a result, “air cargo [remains] vulnerable to the introduction of explosives and other destructive items before it is loaded onto planes, potentially creating risks for the traveling public.” (http://www.dhs.gov/xoig/assets/mgmtrpts/OIGr_10-09_Nov09.pdf)
Quotable Quotes
“The agency theory and strategic management literature suggest that ownership rules influence firm performance because different owners pursue different goals and objectives. . . . A common-sense view is that government-owned firms are less efficient than their private-sector counterparts operating in similar situations. The main arguments supporting this view are: (1) the objectives given to the managers of government owned firms are vaguely defined, and tend to change as the political situation and relative strengths of different interest groups change; and (2) the high mismatch between management’s incentives and the interest of the owners (nation) increases inefficiency as documented extensively in agency theory literature.”
–Tae H. Oum, Jia Yan, and Chunyan Li, “Ownership Forms Matter for Airport Efficiency,” Journal of Urban Economics, Vol. 64, 2008, pp. 422-435.
“All we’re trying to do is keep up with inflation. . . . We scratch our heads when airlines talk about a $2.50 increase for infrastructure investment as a bad thing. But it’s fine for them to charge $15 for a baggage fee.”
–Todd Hauptli, American Association of Airport Executives, in “Airports Want Passenger Fee Charge Increased,” by Roger Yu, USA Today, Nov. 30, 2009.