Airport Policy and Security Newsletter #37

Airport Policy News

Airport Policy and Security Newsletter #37

Topics include: continuing controversy over airport pricing; Registered Traveler goes nationwide; air cargo screening mandate; new parking system at SeaTac; and other news.

In this issue:

Controversy Over Airport Pricing Continues

Despite the FAA’s imposition of caps on hourly operations at the three major New York metro area airports (LGA, JFK, and EWR), delays at both LaGuardia and Newark as of mid-July were worse than in the previous summer. And because about one-third of all U.S. airline flights originate, terminate, or fly through New York airspace, delays there ripple through the entire aviation system.

The U.S. DOT has tried hard to get market mechanisms into place, to provide real financial incentives for airlines to make better use of limited runway capacity in places like the New York airports. The airlines and the Port Authority strenuously opposed changing the landing fee structure to some form of congestion pricing. But DOT persevered, issuing a revision of its airport rates and charges policy that makes clear its long-standing view that airports may charge more for landings and take-offs during peak times; the final version was released in early July. It also requires that airports shifting from traditional weight-based landing charges make the change revenue-neutral-which could seriously limit its effectiveness, by not permitting market-clearing prices and by not generating new revenue for expanding airport capacity.

Reactions to the new policy were interesting. Airports Council International president Greg Principato welcomed the increased flexibility now available to airport operators. The Air Transport Association called the revision “disappointing and frustrating,” but thus far has not followed through on previous promises that it would file suit to block the change. Interestingly, the Aircraft Owners and Pilots Association made its expected negative comment opposing any form of pricing and user fees, but did acknowledge a silver lining in the new policy. AOPA’s Andy Cebula noted that it permits funds generated at an air-carrier airport to be used for capacity projects at a reliever airport owned by the same entity (e.g., Van Nuys and LAX or Teterboro and Newark).

The airlines reserved their main firepower to attack DOT’s parallel effort to auction off a small portion of the slots at the three New York Airports. ATA took aim at the LaGuardia proposal, while the International Air Transport Association focused on the more recent DOT proposal for Newark and JFK. Both claimed that DOT does not have legal authority to auction slots, and ATA called the proposals “a forced march to test unproven economic theories that are unrelated to congestion.”

In response, Sen. Charles Schumer (D, NY) introduced a bill, now cosponsored by Sens. Hillary Clinton (D, NY), Frank Lautenberg (D, NJ), and Elizabeth Dole (R., NC), to prohibit DOT from carrying out slot auctions at any U.S. commercial airport. In addition, S.3150, the Access to Air Travel Act, would forbid FAA and DOT from imposing peak-period pricing at any airport, something FAA has acknowledged it has no legal authority to do. It also would forbid FAA from “charging a fee for the right or permission to use navigable airspace at such airport,” which would circumvent any attempt by FAA to charge for final approach, as opposed to the actual landing. Fortunately, the bill explicitly does not limit the authority of any airport operator to carry out “its proprietary powers and rights,” one of which is to charge for the use of its runways.

Meanwhile, the lack of a market for slots at congested airports is leading to some interesting competition issues, as incumbent carriers scale back their operations due to high fuel costs and reduced demand for air travel. American, for example, this fall will eliminate 28 mainline and 34 Eagle flights at O’Hare, and 5 mainline and 37 Eagle flights at LaGuardia. Other major carriers plan similar cuts. So the question now is: what happens to the slots those flights now use? Under long-standing FAA lose-it-or-use-it rules, those slots should become available to other carriers seeking to expand service in those markets. At least one such carrier, Virgin America, has announced plans to expand at both O’Hare and JFK. To prevent such competition, a bevy of carriers (American, Delta, Northwest, United, and USAirways, shamefully joined by normally pro-competition AirTran) in June asked DOT for a blanket waiver of the rules, to permit them to hold onto such slot s for the duration of the industry’s adjustment to higher fuel prices. Fortunately, DOT rejected that plea as anti-competitive, though it said it would consider individual waivers on a case-by-case basis.

I hope DOT will stick to its guns, upholding the competition that airline deregulation was intended to foster (and which airport pricing would encourage). And let’s hope that Schumer’s bill gets lost in the election-year shuffle.

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Registered Traveler Goes Nationwide

Well, there is good news and bad news on Registered Traveler, the TSA-blessed and contractor-operated program that lets pre-screened members bypass long airport security lines. The big good news is that TSA announced in late July that RT is no longer a pilot program limited to 20 airports (of which 19 were in operation at the time of the announcement). Instead, all airports will be able to offer the service, greatly expanding the potential market for Verified Identity Pass (Clear) and Flo Corp.

The other good news is that Delta has become the first major airline to embrace RT, after a year of bad-mouthing of the program from trade association ATA. Delta entered into a broad national partnership with Verified that has already led to the opening of Clear lanes at Delta’s Terminal D at LaGuardia and Terminal 2 at JFK. Other airports will be coming on line soon at other major Delta-served airports. And Clear lanes should be in operation sometime in August for all carriers at Atlanta’s Hartsfield-Jackson International Airport, offering relief from a major checkpoint congestion bottleneck.

The bad news is two separate indications that TSA still does not see RT as part of its alleged “risk-based” approach to airport security. The original “trusted traveler” proposal from late 2001 envisioned it as enabling TSA, via background checks on RT members, to separate the sheep from the goats, enabling it to spend less time and resources on those passengers at the checkpoint because they had already been pre-screened. But as part of its July 24 announcement of RT going nationwide, the agency also informed us that it is eliminating its “security assessment” of RT applicants along with the $28 fee it’s been charging for that purpose. Why? The assessment “largely duplicates the watch list matching that is conducted on all travelers every time they fly.” In other words, the alleged background check has really been nothing of the sort, which is why TSA still requires RT members to go through exactly the same drill (remove shoes and jackets, empty pocket s of metal, take out laptop, etc.) as all other passengers.

In addition, TSA is doubling the number of airports (from 20 to 40) that will provide separate lanes for “expert” and “family” travelers, a form of competition with RT that requires no annual membership fee and no biometric ID card. That will undoubtedly cut into the demand that would otherwise exist for RT.

I still value my Clear membership, and am glad my card will soon be usable at a lot more of the airports I use. But I really wish TSA would follow the lead of its DHS sibling, Customs & Border Protection, whose International Registered Traveler program appears to be the real risk-based thing (see Issue No. 33). That would save additional time for RT members at the checkpoint, and would allow TSA to shift more of its screening resources to potentially higher-risk travelers.

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Can the Air Cargo Screening Mandate Be Met?

Last fall Congress enacted the 9/11 Commission Act of 2007. Among its provisions was the requirement that TSA implement a system to physically screen cargo carried on passenger planes: 50% of such cargo by February 2009 and 100% by August 2010. At the time, I pointed out that while this mandate sounded costly and cumbersome to those in the cargo supply chains, it did promise to fix a glaring inconsistency in the original Aviation & Transportation Security Act of 2001. That measure mandates 100% explosives screening only for checked luggage on planes, ignoring not only belly cargo but also carry-ons (much less rigorous screening than checked bags) and passengers themselves (the vast majority of whom are checked only for metallic objects).

A lot has happened in the past year. Despite some initial complaints from the New York Times editorial page and cargo-screening advocate Rep. Ed Markey (D, MA), TSA is proceeding with its plan to distribute the screening to various points in the cargo supply chain, rather than concentrating it all at the airport (which would cause huge bottlenecks). The program is called Certified Cargo Screening Program (CCSP), and under it, both shippers and freight forwarders may opt to become Certified Cargo Screening Facilities (CCSFs), where actual screening and sealing of shipping crates, pallets, or containers would take place. Sealed boxes would then be transported to the airport by certified personnel, where they would be turned over to airlines for loading onto planes. The advantage to shippers and forwarders is that their cargo will likely get onto planes sooner than what ends up getting screened at the airport.

Last year the Congressional Research Service made an initial estimate that the belly-cargo screening mandate would cost $3.7 billion over its first 10 years. The only number I’ve seen since then is in GAO’s July 15, 2008 testimony on TSA’s progress in this area (GAO-08-959T). GAO’s Cathleen Berrick reported that although CCSFs will be required to purchase their own screening equipment, TSA will reimburse them up to $375,000 per facility. There are about 12,000 freight forwarders, not all of whom will volunteer for this role, but a number of manufacturers probably will, so let’s use 12,000 as an estimate of the number of CCSFs. At $375K apiece, the equipment cost alone would be $4.5 billion. To that one-time cost must be added the annual staff and paperwork cost at each CCSF, plus the annual cost of TSA inspectors to oversee the whole process. It’s clear this is going to cost a lot more than CRS estimated.

Lest you think this is just about small packages and other mundane stuff, belly cargo consists of about 250 million individual packages (boxes, crates, pallets, containers) per year. And at $4.4 billion, it’s a non-trivial portion of airline revenue. (Domestic passenger revenue in 2005 was $71.2 billion.) Stuff shipped this way includes laptop computers, auto parts, human organs, fresh flowers-an incredible array of things. That makes physical screening quite complicated.

GAO says TSA is making progress, but still faces four major challenges in implementing the system. First, it’s still testing various technologies, to decide which ones work well enough for it to certify. Second, there are a number of long-standing exemptions from physical screening, and TSA has to review them all to see which ones might still be justified under the new law; that work is still under way. Third, TSA has a lot of work to do to expand its staff that does compliance inspections of freight forwarders, since it will also have to inspect shippers that become CCSFs. In a 2005 report, GAO found that TSA had inspected only 49% of forwarders, and had found violations at more than 40% of those inspected. Finally, GAO pointed out that TSA does not plan to include “inbound” cargo in this program-although Customs & Border Protection already screens inbound cargo upon its arrival here.

TSA says it will meet the February 2009 deadline for screening 50% of belly cargo. I’m not holding my breath, given all it has left to do. And I still question whether this new mandate from Congress is a wise use of resources-as opposed to devoting much of that money to better intelligence work to identify potentially high-risk cargo.

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Hope In Sight on Laptops and Shoes

There are prospects that TSA might be in a position to reduce two of the hassles of current passenger checkpoint screening: removing laptops from carry-on bags and removing your shoes.

You may have seen recent news coverage about “checkpoint-friendly” computer cases being developed by luggage makers and undergoing testing by TSA. A July 7 USA Today story reported that the agency may be within a month of allowing such devices. Among the competitors are CODi of Harrisburg, PA; Skooba Design of Rochester, NY; and California-based Pathfinder Luggage. TSA does not plan to actually certify any of them, but is offering guidelines for what constitutes a “checkpoint-friendly” case. The reason laptop-removal is now required is so that screeners can view its circuitry on their X-ray screen unobscured by other wires or electronic devices-and also to prevent the laptop from being used as a shield to hide weapons. So the new case must be designed with a sleeve that holds only the laptop, with a separate portion for carrying other accessories.

I see two major drawbacks with this approach. First, a lot of cases that will be marketed as checkpoint-friendly won’t be, and will lead to lots of instances in which the screener stops the belt and requires the laptop to be removed and run through again by itself. This will slow things down for everybody else. Second, since airlines are getting fussy about enforcing the two-carry-on maximum, I for one don’t want a separate carrying case for my laptop. I travel with a roll-aboard and a briefcase, and the laptop goes in one or the other. Unless they invent a briefcase with a fold-out laptop pocket that otherwise meets my briefcase needs, I won’t even consider such a product.

A far better approach is the new multiview checkpoint X-ray machines that I wrote about in Issue No. 36. These machines are now in use at all seven of BAA’s airports in Scotland and London–more than 200 of the Smiths Detection machines in all. British aviation security officials have concluded that the sophisticated, multi-view imaging capability provides an accurate look into laptops that are inside ordinary carry-on bags. Hence, passengers are BAA airports are no longer required to remove their laptops. Time savings in checkpoint processing are estimated at 15%, so far. TSA is installing 900 multiview X-ray machines this year, at major airports nationwide. One can only hope that they talk with their U.K. counterparts to understand how and why they have found the new machines up to the task of checking laptops contained in ordinary carry-on bags.

What about shoe removal? The good news here is that the GE-developed shoe scanner that had been expected to be installed at all of Clear’s Registered Traveler airport checkpoints-but had twice been turned down by TSA-is now in actual airport trials. After further development by GE and further testing at TSA’s Transportation Security Lab in Atlantic City, it is being installed in the baggage-claim area at Atlantic City International Airport to test customer reaction to the device (and presumably to gather real-world data about what it detects on people’s shoes). TSA has not said how long this testing will run, or what else may have to be done in order to certify the shoe scanner, but at least there is activity on this much-needed improvement.

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New Parking System at SeaTac

In Issue No. 33 I reported on a very high-tech system installed in the 3,800-space short-term parking structure for Heathrow’s new Terminal 5. It guides an incoming driver to the nearest available space, and upon his return, tells him where the car is parked. My source for that story did not reveal the cost, but I’m sure it was substantial. Still, such a system is easier to include when a new parking structure is being designed and built-as opposed to retrofitting some kind of parking guidance into an existing structure.

But that’s what has been developed in-house at Seattle-Tacoma International Airport. As reported in Aviation Daily (June 24, 2008), the new system was retrofitted into a facility first built in the 1970s, with two subsequent additions, for a total of 8,500 spaces. The cost was just $400 per space. SeaTac’s IT people found a video system that could identify vehicles but did not have the software to calculate available spaces and display that information on display boards. They developed the software in-house, and the now-operational system first gives incoming drivers a count of available spaces on each floor. Next, at the approach to each level, additional displays indicate how many spaces are available to the left and to the right. And the final signs show how many spaces are unoccupied in each four-row section.

What a great convenience for those hunting for a parking space, as I spend untold hours doing every year. Kudos to the software people at SeaTac.

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News Notes

Hassle Factor Reducing Air Travel. According to a survey commissioned by the Travel Industry Association, nearly half of all U.S. air travelers said they would fly more if air travel were easier, and more than 25% skipped at least one trip in the past year due to the hassles involved. Based on the survey data, Americans took 41 million fewer trips by air in 2007, costing the travel industry-airlines, hotels, and car-rental companies–$18 billion. Those who flew five or more times in the past year had the worst impression of air travel.

New TSA Focus on Airside Security. Nearly eight years after 9/11 put the spotlight on aviation security, the TSA has created a new program to reduce airports’ vulnerability on the airside-the ramp, taxiways, runways, etc. The Airside Vulnerability Reduction Team will be headed by former Atlanta Airport Federal Security Director (and former L.A. police chief) Willie Williams. The idea is to apply community policing techniques to airports, especially to the “secure” areas outside the terminals.

U.S./U.K. Trusted Traveler Program. The International Expedited Traveler Initiative between the USA and the United Kingdom was signed on June 24th. It will allow prescreened passengers with a biometric ID card to have expedited processing when arriving by air in either country. On the U.S. side, this is one application of the DHS’s “Global Entry,” an international registered traveler program. Americans who pass a background check and provide fingerprints can use their biometric ID card to bypass passport processing lines upon returning to this country, checking instead at a kiosk. DHS has also recently signed a Global Entry agreement with The Netherlands.

TSA vs. ACLU on Watch Lists. Following an American Civil Liberties Union news conference July 14th, which claimed that the terrorist watch list is approaching one million names and should be curtailed, TSA posted a refutation on its website. The FBI’s Terrorist Screening Center, said TSA, has about 400,000 individual names on its consolidated watch list, 95% of whom are not U.S. citizens or residents. Furthermore, said TSA, fewer than 50,000 people are on the two passenger screening lists: the selectee list (requiring secondary screening) and the No Fly list.

Separate Screening Lines for Pilots-and Politicians. TSA announced in mid-July that it is testing separate secure checkpoint screening for commercial flight deck crew members; this check will take place at exit lanes, where there are no X-ray or metal detector units. The new checkpoints will be equipped with access to a secure database to verify the crewmembers’ credentials. This move is long overdue; after all, a flight crew does not need weapons to take down a plane; all they have to do is fly it into the ground or a building. CrewPASS is in a 60-day trial at BWI, Pittsburgh, and Columbia, SC. Incidentally, an airport executive passed along to me the news that for some time now, TSA has maintained a “special screening policy that enables politicians, as well as their armed security personnel, to bypass [regular] TSA checkpoints.”

New Reports on Airport Ground Access. The Transportation Research Board’s new Airport Cooperative Research Program has issued two more reports on ground access. ACRP Legal Research Digest #3 is “Survey of Laws and Regulations on Airport Commercial Ground Transportation.” And Report #4 is “Ground Access to Major Airports by Public Transportation.”

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Quotable Quotes

“Repeated attempts to avoid economic reality by aviation special interests have produced an increasingly unreliable aviation system. In our economy, prices work not only to balance supply and demand, but also to add capacity where we need it – not just where politicians want it. In other words, the argument championed by airline lobbyists . . . that “we just need more capacity and technology, not pricing,” incorrectly assumes that these are competing concepts. But the main reason we have failed to add capacity and modernize our air traffic control system is that our approach to paying for aviation infrastructure completely disconnects the price of using capacity from its true costs and thus promotes overuse at popular airports and during popular flying times. It’s understandable that the airline industry wants to protect its interests. But the Transportation Department is in the business of protecting consumers, fostering competition, and providing reli able air travel, not placating special interests. Independent economic experts of all political backgrounds agree that either auctions or congestion pricing is far preferable to the failed experiment we have now.”
–DOT Secretary Mary Peters, “End Gridlock on the Runway,” New York Times, July 22, 2008.

“There are so many variables and contingencies that we don’t now know the answers to these questions [about the shape of the airline business in response to much higher oil prices]. Certainly, no government effort to find and implement a planned answer can be conducted free of intense interest-group politics and crippling complexity. Nor can it be conducted quickly (consider the FAA’s struggle with sectional and labor interests in its efforts to restructure ATC). There would be no logic in outsourcing this decision to a private monopoly, either. Any single management will be limited by its own history, talent, circumstances, prejudices, and incentives. In short, neither an all-seeing government nor any single private management can be relied on to predict the shape of the industry as we move through what may well be a terrible and rapidly-changing period. What is essential is that we generate multiple, competing predictions, along with the freedom for f irms to innovate using them and see which innovations flourish and which ones die. Only a deregulated market can do that.”
–Michael E. Levine, New York University School of Law, International Aviation Club, July 29, 2008

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