Airport Policy and Security News #112
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Airport Policy News

Airport Policy and Security News #112

Best hope for summer screening lines | Airport slots as ill-advised central planning

In this issue:

Best Hope for Fixing Summer Screening Lines

Despite “traveler impatience with TSA being at the breaking point,” per a recent CNN headline, few of the measures being pushed in Congress will make a significant difference in alleviating the unprecedented lines airports are already experiencing before the start of the summer travel season. As I reported last issue, the two key measures that could be implemented in time to have a major impact are converting some 2,800 TSA Behavior Detection Offices back to their original screening duties and immediately launching the long-delayed third-party PreCheck recruitment for which several contractors have already been vetted by TSA and are basically ready to begin wholesale recruitment efforts.

Instead, we have a whole flurry of too-small or ineffective proposals. They include:

  • Forcing airlines to cease charging fees for checked baggage (being urged by both DHS itself and several prominent members of the Senate). But evidence from Midway Airport refutes that idea. About 90% of passengers at Midway fly Southwest, which does not charge bag fees. Yet lines at Midway have recently been 90 minutes or longer.
  • Redirecting several billion dollars from passenger security fees that have been allocated (by Congress) to deficit reduction instead of to screening. That would be fair and reasonable, but getting such legislation enacted seems highly unlikely, and would be too late to hire and train thousands of screeners in time for summer.
  • More canines—give me a break!
  • Adding 768 more screeners, as already approved by Congress: still a drop in the bucket, even if they can be hired and trained in time. TSA is short more than 6,000 screeners compared with 2011,when passenger numbers were 11% less than today.

Everybody agrees that TSA really dropped the ball when it projected much faster growth in PreCheck membership than has actually occurred. That’s because it has relied on a sole-source contract with Morpho Detection to operate several hundred locations to which would-be PreCheck members must report and be fingerprinted. Over the past three years TSA has been through three separate rounds of solicitating proposals from big-data companies that have developed and tested, apparently to TSA’s satisfaction, vetting systems that can assess traveler risk, in some cases without using biometrics (e.g. fingerprints). If this really works, it means enrollment applications can be done entirely online, which the companies expect would vastly increase the number of applicants.

I’ve reported on this seemingly never-ending process of changed TSA requirements and new rounds of proposals—and frankly, I’m surprised any of the companies are still willing to participate after such lengthy delays. Apparently, there has been ongoing resistance at fairly high levels within TSA to this third-party concept, and it appears as if Morpho has lobbied to preserve its de-facto monopoly for as long as possible. But there are signs that TSA may actually give the green light for this long-stalled effort, possibly within a month or so.

An industry source who has been reliable in the past told me last week that there is support in Congress for third-party recruitment without biometrics, which may give TSA leadership the courage to finally launch this effort. And the other piece of good news is the May 23rd firing of Kelly Hoggan, TSA’s assistant administrator for security operations, whom my sources identify as having been a key internal road-block to implementing third-party recruitment. If that’s correct, then the prediction that TSA could green-light the program in June is plausible.

I’m still amazed that lobbying by airlines (A4A) and airports (AAAE and ACI-NA) has not aggressively pushed for TSA to return its 2,800 BDOs to their original screening duties. To be sure, that would not completely fill the 6,000+ hole, but since these people would not need the same kind of training as new hires, they could make a big difference right away, not after the summer is over.

Neither airlines nor airports should resign themselves to DHS Secretary Jeh Johnson’s admonition that long wait times are inevitable this summer. Not when several methods are at hand to make major improvements, quickly.

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Airport Slots Still Represent Ill-Advised Central Planning

Though I’m not a big fan of antitrust laws, I had to cheer last fall when the Justice Department filed suit to block United’s proposed acquisition of 24 Newark slots from Delta. Why? Because United already controlled 902 (73%) of all the slots at Newark—and was not even using 82 of them. Hogging slots is a deliberate attempt to keep out competitors, especially lower-priced airlines like Southwest, JetBlue, and Frontier. United and Delta asked a federal court to dismiss DOJ’s suit in January, but the whole issue became moot in April when the FAA announced that because delays at Newark had decreased significantly in 2015, it was changing the airport from Level 3 (mandatory slots) to Level 2 (required schedule coordination by FAA).

In the wake of that change, JetBlue has proposed adding six daily flights to Florida cities from Newark, and Southwest has added flights to Las Vegas and Orlando. With Alaska having agreed to acquire Virgin America, it will now gain access to the slots the latter has been using, potentially using them for new transcontinental flights.

No large airline is immune to the temptation to use slots to obtain as much market power as possible. Dallas Love Field is a classic example, though the limitation there is the number of gates, not any imposed slot limits. The political deal that got rid of the Wright Amendment (which had restricted long-distance flights from Love Field) mandated the destruction, solely for political reasons, of 12 of the airport’s former 32 gates, leaving only 20, all but four of which are fully used by Southwest.

So there is some poetic justice in Southwest’s current difficulties in expanding service at another airport, Long Beach, CA. That airport has a locally imposed noise ordinance limiting large-jet operations to 41 per day, with another 25 for small jets and a smaller number for “industrial” flights (dating to the time when McDonnell-Douglas—later Boeing—had an assembly plant at the airport). Currently JetBlue controls 35 of the large-jet slots, and Southwest has begun limited service using the remainder. Southwest is now pointing out that neither the small-jet nor the industrial allocation is being fully used and is asking that some or all of those slots be made available for airline purposes.

The whole approach that has grown up around airport slots is one of political rather than market allocation. The Love Field status quo was a political gift to Southwest, and the status quo at Long Beach is a political gift to JetBlue. United and Delta operate as if they owned the three major New York airports and are entitled to be the dominant players wherever they choose (and competition be damned).

The fact is that at certain airports, demand is greater than their current capacity. No economist would recommend a politically-determined rationing of that capacity, but that is what current practices amount to. A far better approach would be market pricing for runway use, currently best illustrated by privatized London Gatwick Airport, which charges for both landings and take-offs, and varies those prices both by time of day and by travel season (in addition to by noise level). Anyone willing to pay the current price can use Gatwick’s runway, and if prices are low enough to lead to congestion and delays, they can be increased. Noise-based pricing would address Long Beach’s noise concerns far better than politically determined allocations of slots to different types of planes. And demand-based pricing of both landings and take-offs would open up New York’s airports to increased competition, while generating additional revenue to pay for added runway capacity at JFK and Newark.

Anything other than traditional weight-based landing fees used to be illegal in this country, but thanks to the efforts of former DOT Secretary Mary Peters, demand-based pricing is now allowed—though no U.S. airport has dared to try using it. It’s working at Gatwick, and it would work here, too.

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More Large Airports Considering Private Screening

The inability of TSA to manage screening so that it does not lead to hour-long lines is prompting some of America’s largest airports to look seriously at replacing TSA screening with TSA-certified screening companies. While these airport boards and managers understand that it would likely take a year or more for such a transition to be implemented, they have little confidence that TSA’s screening problems will be fixed following this summer’s expected nightmares.

Among the airports exploring this option are the following:

  • Atlanta—where Mayor Kasim Reed fired airport manager Miguel Southwell, who was not pursuing previously announced intentions to apply for the TSA opt-out program called the Screening Partnership Program (SPP).
  • Chicago O’Hare—where Mayor Rahm Emmanuel and key city council members are talking seriously about applying to join SPP.
  • Minneapolis/St. Paul—where the Metropolitan Airports Commission is looking into applying to SPP.
  • Phoenix Sky Harbor—where city councilman Sal DiCiccio is supporting the Aviation Director’s consideration of SPP.
  • Seattle-Tacoma (SEA-TAC)—where Port of Seattle commissioners are also looking into joining SPP.

These aviation professionals look with envy on the absence of long screening lines at SPP members like San Francisco (SFO) and Kansas City (MKC), where TSA-regulated private screeners have been in place since the creation of TSA. They may also be aware that all screening in Canada, and at most large airports in Europe, is carried out by government-certified and regulated screening companies. This follows the basic good government principle of separating regulation from service provision.

There is a growing amount of evidence that private screening is more cost-effective than TSA screening. Greater effectiveness than TSA at stopping prohibited items getting through checkpoints is not a very high hurdle, given the DHS Inspector General’s finding last year that 95% of such items were being missed by TSA screeners. Back in 2007, an outside study commissioned by TSA but never released (though summarized by GAO) found that screening performance at six SPP airports was as good as or better than screening performance at six comparable TSA-screened airports.

TSA continues to claim that its own screening costs slightly less than private screening, but GAO has debunked that claim, which ignores costs such as TSA pensions that are not included in the agency’s budget (and which it therefore ignores in cost comparisons). But the most dramatic cost comparison was done by the staff of the House Transportation & Infrastructure Committee in 2011. Comparing private screening at SFO with TSA screening at LAX, they found that because the private SFO screeners process 65% more passengers per screener than TSA screeners at LAX, switching to private screening at LAX would require 867 fewer screeners there, at annual savings of $33 million. This study also found the screener attrition rate to be 60% greater at LAX (13.8%) than at SFO (8.7%), which also drives up costs (and may slow down lanes as newbies learn the ropes after training).

In 2012, reporters from the New York Times and USA Today interviewed airport directors at SPP and TSA-screened airports, finding that screening companies have a lot more staffing flexibility than TSA. The companies are better at using part-time screeners to staff up for peak periods, rather than having too many full-timers with nothing to do at non-peak times. Similar findings were reported by airport consultant Steve Baldwin Associates in a recent report, finding that SPP airports experienced gains in customer service. That was due to greater workforce flexibility in working with airlines to match screener staffing levels to passenger traffic levels, both seasonally and during each day’s peaks and valleys.

Finally, here’s one red herring that has been raised by an anti-SPP attorney in Phoenix: the possibility of increased liability for airports that switch to private screening. Congress dealt with that in 2005 by amending the 2001 Aviation & Transportation Security Act (which created TSA) to provide clear and unambiguous liability protection for airports, including those that join SPP. It includes language stating that “an airport operator shall not be liable for any claims for damages filed in State or Federal court,” and applies to both an airport’s application to opt out and to the screening activities performed by a TSA-vetted screening company at their airport. This added language is in addition to the liability protection already provided by the SAFETY Act of 2002, which applies to all companies designated by DHS as providing security services and equipment.

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Should Airport PFCs Be Usable for Airport Rail Transit?

The FAA on May 3rd proposed in the Federal Register several possible changes to the current rule that prevents revenues from passenger facility charges (PFCs) being used for airport rail projects that are used by anyone other than airport patrons and workers. The aim would be to encourage better intermodal transportation access to airports. Airlines have historically opposed using revenues for anything other than airside and landside projects, but I think it’s worth looking at the pros and cons of this proposed change.

Globally, there are two types of airport rail projects. One type is an airport station on a regular rail transit line that makes numerous stops (e.g., the Reagan National stop on the Washington Metro Blue and Yellow lines). The other type is a purpose-built line, generally nonstop, between the airport and a central business district station (e.g., the Heathrow Express in London). Over the past decade, I’ve twice used such nonstop lines from the airport to downtown, once in Stockholm and again in Vienna. These trains are fast—and expensive, serving mostly tourists and business travelers, not ordinary transit riders.

I don’t know the economics of the Stockholm and Vienna lines, but I do know the story of the Heathrow Express. It was privately financed, developed, and operated by the airport, after BAA was privatized. Working with British Rail, BAA made a deal to re-purpose an existing rail line from London’s Paddington Station to near the airport boundary, and built several additional miles underground to connect it to two newly created on-airport stations. Instead of nearly an hour each way on the regular transit line, the nonstop Heathrow Express makes the trip in 15 minutes—at the steep one-way fare of £18. BAA has said the capital cost was “over £500 million” and that the operation is in the black.

Toronto recently attempted something similar, spending C$456 million on the Union-Pearson Express, a high-end express train between downtown’s Union Station and Pearson International Airport. With two intermediate stops, the journey time is 25 minutes and the initial one-way cash fare was $27.50. The opening weeks were a disaster, with only about a 10% load factor. A month later, fares were cut nearly in half ($12 cash, $9 for Presto card holders), and ridership increased. What this change does to the project’s economics remains to be seen.

The most costly project now in prospect is a nonstop (20-minute) express line from a downtown Paris rail station to Charles deGaulle Airport. It would be built as a joint project of Aeroports de Paris and state-owned railroad company SNCF, at a cost of $1.9 billion. A separate, 20-year concession is planned for train operations, with the winning bidder having to provide the rolling stock plus operating and maintaining the trains.

A different example is Denver’s recently opened Eagle transit line, between downtown Union Station and Denver International Airport. At a cost of about $1.4 billion, the new line was delivered on time and under budget by a public-private partnership (Fluor and Balfour Beatty). The electrified rail line makes the trip in about 40 minutes, due to there being eight station stops along the way to the airport. However, compared with European airport express trains, the fare is a bargain $9 (compared with taxi fare to DIA often well above $50).

It’s clear there are trade-offs between non-stop airport-only lines and regular transit lines that also serve the airport. Downtown London, Paris, Stockholm, and Vienna are all important tourist as well as business destinations—which is not the case for most U.S. cities. The “downtowns” of Atlanta, Dallas, Denver, Houston, Los Angeles, San Diego, and many others hold only a modest fraction of the metro area’s jobs and are not especially tourist meccas. So where would a purpose-built airport express line go to?

On the other hand, given the serious congestion plaguing large U.S. metro areas, including the airport as a stop on the transit system’s route map seems like simple common sense. With that as a background, let’s look at the three possible changes FAA has proposed to the current PFC usage rules, as summarized in a recent Infra Insight brief from Nossaman LLP:

  • The first would allow PFC funding of the incremental cost of adding an airport station to a transit system. That seems pretty innocuous, since such a station would almost always be on airport property and the only people using the airport station would be airport patrons and workers.
  • The second would allow PFC funding of a portion of a new through-track rail line if that was less expensive than building a dedicated people mover connecting to an off-airport rail station (such as the connector from SFO to a nearby BART station). That also seems innocuous, for the same reason as above.
  • The third possible change goes further and would allow PFC funding for a portion of the rail transit system if the portion to be funded would cost no more than the prorated cost of the trackage on airport property, based on ridership forecasts and the percentage of airport-bound riders.

This is starting to feel like a slippery slope, so let me note for the record that in my surface transportation work, I generally find that rail transit is far less cost-effective than express bus and bus rapid transit in most U.S. metro areas. So my reaction to the FAA’s proposals here is with the caveat that while rail transit is often not a good value for the taxpayer money that it costs, if such a system is going to be built anyway, having it include service to the airport is generally a good idea.

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News Notes

LaGuardia PPP Reaching Financial Close. The $2.8 billion deal under which a private consortium will design, finance, build, operate, and maintain a replacement for the obsolete Central Terminal at LaGuardia Airport was set to reach financial close by press time. The consortium is issuing $2.35 billion in tax-exempt private activity bonds and putting in about $200 million in equity. The Port Authority is providing an additional $1.2 billion to pay for the grandiose entrance hall added to the project by Gov. Andrew Cuomo, and will also pay for a new parking structure. Public Works Financing reports that 85% of the funds pledged for debt service on the bonds will come from airline use payments, with the balance coming from retail concession revenues.

London City Airport Expansion Will Proceed. The election of Sadiq Khan as London’s new mayor, replacing Boris Johnson, has removed an obstacle to the planned expansion of London City Airport. That plan includes adding seven more aircraft parking stands, to be built on a deck over the Thames River. Johnson had refused to sell city-owned land to the airport, which Khan is comfortable with doing. The airport’s private owners expect to spend $435 million on the expansion, which includes a parallel taxiway in addition to the new deck structure.

Propeller Airports Proceeding with Paine Field Terminal. Leading airport design firm Fentress Architects has been hired by Propeller Airports to design the new terminal it plans to build at Paine Field, north of Seattle. The project is a public-private partnership between Propeller and Snohomish County, owner of the airport. The terminal will allow the start of scheduled passenger airline service at the airport, a former military airfield and home of a major Boeing assembly plant. Construction is expected to begin in fourth quarter 2016, with the first commercial flights possible by fourth quarter 2017.

Vancouver Airport Sells Vantage Airport Group. Late in April the Vancouver Airport Authority (YVR) sold its 50% stake in Vantage Airport Group, which owns and operates airports worldwide. YVR launched Vantage in 1994 to provide management services at other airports. In 2008, YVR sold 50% of Vantage to Gateway Airports, and Gateway has now purchased the remaining 50%. The company manages eight airports, in Canada, Cyprus, and Nassau (Bahamas). It is also part of the PPP consortium that will develop and operate the new Central Terminal at LaGuardia Airport in New York.

CEI and Rutherford Institute Suing TSA Over Body Scanner Rule. Two nonprofit organizations—Competitive Enterprise Institute and Rutherford Institute—filed suit May 2nd in the U.S. Court of Appeals for the DC Circuit challenging the TSA’s final rule on body scanners. The organizations argue that TSA’s benefit/cost analysis failed to take into account academic research (from Cornell University and elsewhere) that invasive screening procedures have diverted significant numbers of travelers from flying to driving, resulting in about 500 additional highway deaths per year.

Amazon Doubling Air Cargo Fleet. In May Amazon announced a second air cargo lease deal, this time with Atlas Air Worldwide, for 20 more Boeing 767 freighters. Atlas Air will operate the leased aircraft for Amazon over the next 10 years. Like Amazon’s previous deal with Air Transport Services Group (reported here last issue), the Atlas lease agreement gives Amazon the option to acquire up to 20% of Atlas Air’s common shares over the next five years at a stated price.

Bulgaria and Serbia Planning Airport Privatizations. The government of Bulgaria in May announced a forthcoming competition to upgrade and operate the Sofia Airport under a 35-year concession. The successful bidder must make an up-front payment of at least $314 million and make an annual payment of at least 5% of net airport revenue. And the Serbian government has hired advisors for the privatization of Belgrade Airport: KPMG, Lazard, Linklaters, and Mott MacDonald. Part of the advisors’ task is to aasses the relative merits of an outright sale versus a long-term concession. Currently, 16% of the airport is held by investors, with the government owning the rest.

Bipartisan House Bill on Perimeter Security. On April 28th, the House Homeland Security Committee voted unanimously for a bill by Rep. Bill Keating (D, MA) requiring TSA to assess the perimeter vulnerabilities of U.S. airports. Keating cited a 2015 AP study that found at least 268 penetrations since 2004 at 31 major airports. Recent news reports on continued intrusions make the issue more politically timely.

Lithuania Appoints Airport Privatization Advisors. The Lithuanian Ministry of Transport and Lithuanian Airports have hired a consortium led by InverVistas to advise on the country’s planned airport privatization. The process will involve all three commercial airports: Kaunas, Palanga, and Vilnius. The consultants will structure the procurement, prepare the documentation, and develop the procedures for bidders to compete. The contract is for 22 months.

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Quotable Quotes

“The TSA is not just about staffing; it’s about management. It’s about allocation of its resources, and it’s about understanding that airline schedules are published. There are no big news bulletins here; everybody knows what time the big crunch times are at the airport on domestic and international flights. And there’s no excuse for not keeping every line open and properly staffed during the crunch times,”
—Peter Greenberg, CBS News Travel Editor, in John Phillips, “The TSA Is Not Giving Travelers Much TLC,” Orange County Register, May 23, 2016

“Research from the House Committee on Transportation and Infrastructure found potential savings of $1 billion over five years if just our top 35 busiest airports operated as efficiently as the private screeners at San Francisco’s airports do. The report also showed that private screeners processed an average of 65% more passengers per employee, thanks in large part to higher employee retention rates and better morale—in stark contrast with the TSA, which has for years been dogged by complaints of low morale and a culture of complacency. Expanding the private screening program, if not privatizing the airport security business entirely, would go a long way to helping improve the experience fliers face at our nation’s airports. The TSA, of course, would still exist to set standards and oversee quality control for the companies administering security.”
—Rep. Darrell Issa (R, CA), “A Simple Solution to the TSA Breakdown,” CNN.com, May 24, 2016

“This problem has been years in the making. To solve it, the government may have to get the TSA out of the screening business altogether. The idea is neither new nor outlandish. Canada and most Western European companies employ private contractors to screen passengers. . . . There’s a strong efficiency argument as well. Under the current system, the TSA both sets the rules for airport security and enforces them. In effect, the agency regulates itself. Local authorities have few if any means to seek redress if TSA proves inefficient, ineffective, or weak on customer service. Firing a contractor is easy; firing a unionized government employee much less so.”
—Adam Minter, “Time to Get Rid of the TSA,” Bloomberg.com, May 10, 2016

“The Government Accountability Office is also skeptical that the TSA is stopping terrorists. It concluded in 2013 that there’s no evidence the agency’s SPOT program, which employed 2,800 as of the study and attempts to scan passengers for suspicious behavior, is at all effective. Only 14 percent of passenger flaggings by TSA officers led to a referral to law enforcement. Only 0.6 percent of TSA flaggings led to an arrest. None of those were designated as terrorism-related.”
—Dylan Matthews, “The TSA Is a Waste of Money that Doesn’t Save Lives and Might Actually Cost Them,” Vox.com, May 17, 2016

“Consumers who apply for PreCheck membership can wait 2 to 3 weeks for an enrollment appointment. Then they must arrive for an interview with proof of U.S. citizenship and provide fingerprints for FBI background-check purposes, often at enrollment centers on the secure sides of airports, which requires an airline ticket. Additionally, many airports do not have enrollment centers, and other enrollment centers are in hard-to-find locations such as seaports. Finally, enrollees can wait weeks more for approval. The solution is to scrap the off-putting and grossly inefficient in-person enrollment process and replace it with a process which is exclusively online and that could enroll millions of members in weeks, once green-lighted. TSA requires an FBI background check. However, 3rd party security firms that offer online enrollment use felony records and all manner of terrorist watch lists, which are just as predictive as FBI checks. There is broad industry and government support for this approach. Indeed, many at TSA, where this process has been successfully vetted over the past two years, are supportive. The just-replaced head of security at TSA blocked this online enrollment model.”
—Kevin Mitchell, “The U.S. Has a ‘Brussels’ Problem,” Business Travel Coalition news release, May 26, 2016

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Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation.