In this issue:
- Divided Security at Newark—and Elsewhere
- New Wrinkles re Body Scanners
- U.S. Airport Privatization Taking Off?
- Improving Watch Lists
- Maximizing the Value of Airport Land
- News Notes
- Quotable Quote
- Divided Security at Newark—and All Other U.S. Airports
Divided Security at Newark—and Elsewhere
Two U.S. aviation security incidents occurred during the year-end holidays, the underwear bomber attempt on Dec. 25 and the Newark Airport security breach on Jan. 3, the last day of New Year’s weekend. The latter has gotten far less attention than the former, and its implications for airport security have still not been fully understood.
As you will recall, a graduate student slipped through the exit from the secure portion of Terminal C to bid one last good-bye to his girlfriend. Although someone noticed the breach, it took the TSA one hour and 40 minutes to confirm that it had taken place (via video from a Continental Airlines surveillance camera)—at which point it shut down screening and evacuated the terminal, disrupting more than a hundred flights.
Reporters within a day or two found out that there are two sets of security cameras at Terminal C, one set owned by the Port Authority and the other by terminal tenant Continental. The latter is a left-over from pre-9/11 days when the airlines were responsible for terminal security. Fortunately, it was operational on Jan. 3rd, because the Port Authority’s cameras were not. According to the Port Authority, although it pays for that camera system, it is operated by the TSA. And the latter had not informed the PA that the system was inoperative.
Sen. Frank Lautenberg (D, NJ), who called the TSA’s failure to prevent the student’s illegal entry “completely unacceptable,” said of the video situation, “It is an odd system.” It’s more than odd, Senator: it’s completely unacceptable. But it was Congress that created this fragmented approach to airport security. In the heated debate that ensued in autumn 2001, following the 9/11 attacks, a majority in Congress was determined to punish the airlines and their security contractors for the low-quality checkpoint screening that they blamed for allowing the attackers to board the planes unimpeded. The majority’s solution was to “federalize” not all of airport security but just passenger and baggage screening. By default, that left everything else—lobby security, in-airport access control, perimeter protection, etc.—in the hands of the airport. In other words, fragmented airport security is the law of the land.
I’m certainly not advocating expanding TSA’s role to cover all these other areas. Unified airport security can be brought about in another way—namely by making the TSA into the aviation security policy and regulatory body and making airports responsible for carrying out all aspects of airport security, including screening. That turns out to be the model used in nearly all of Europe, as I confirmed while researching a paper for the OECD’s International Transport Forum last year. At all the major E.U. airports, the airport itself is responsible for the screening of passengers and bags, access control, lobby security, perimeter control, etc., under national government regulatory oversight. For the screening function, most large airports contract with government-certified security companies, though some employ screeners directly.
Thus far, congressional scrutiny of the Newark episode has focused on finger-pointing over why the Port Authority and the TSA had not communicated better. If Sen. Lautenberg truly wants to end fragmented airport security, he should call a hearing to explore the European model.
Body Scanners: the Saga Continues
Since I wrote about this issue early last month, there have been a number of developments. The Obama administration’s FY 2011 budget proposal calls for acquiring 500 more body scanners, in addition to the 450 on order this year. (Currently there are only 40 in use at U.S. airports: six for primary screening at six airports and 34 used for secondary and random screening at another 13 airports.) But in December the DHS Inspector General’s office, in a report on equipment being purchased for TSA under the stimulus bill, found that the whole body imagers TSA has on order “are still undergoing qualification and operational testing.” Hence TSA “does not yet know whether or when these technologies will be available for deployment.” TSA disagreed with this finding, arguing that their Passenger Screening Program will “make modifications to the expenditure plan when delays or deficiencies result in the unavailability of qualified products.”
That technical uncertainty helps to explain the increasingly heated PR efforts by producers of the two alternative kinds of body scanners: millimeter wave and backscatter X-ray. The former does not produce ionizing radiation; rather, it bounces off the body very short wavelength signals similar to microwave or infrared. Advocates of millimeter stress that it is not the kind of (ionizing) radiation most people fear, whereas advocates of backscatter stress the very low X-ray dosages involved (e.g., one standard chest X-ray is equivalent to about 1,000 body scans). Backscatter makers say their devices produce higher image quality than millimeter, but millimeter makers say theirs is faster. For example, the millimeter wave scanners now in use at Amsterdam Schiphol claim to require only 3 seconds to make their image.
Still not ready for prime time is a sub-millimeter wave technology called terahertz (or T-rays), about one-tenth the wavelength of millimeter waves. The big advantage of the smaller wavelength is finer resolution of detail. Researchers at MIT, Rice University, and in Europe are independently working on technology for generating and focusing T-ray beams. To the best of my knowledge, no T-ray device has reached the stage of being submitted to the TSA’s labs for testing.
When it comes to public acceptance, I was surprised by last month’s USA Today/Gallup survey results, which found that 78% of adults who had flown at least twice in the past year approved of body scanners being used at airport security checkpoints—though only 67% said they would be comfortable being examined by one. But populist media in the U.K. continue to stir up opposition, now routinely referring to the devices as “naked body scanners.” While that is an accurate short-hand way of describing something that can see items hidden beneath clothing, it’s a clever anti-scanner propaganda term.
But the way scanners are being introduced in the U.K. is overkill, in my view. The initial deployment of body scanners will be for primary (not secondary) screening of a randomly selected fraction of travelers at Heathrow and Manchester. Those who refuse the scan will not be allowed the option of a pat-down, as in this country. Instead, they will be refused access to the checkpoint and not allowed to board their flight. This is exactly the opposite of a risk-based approach, and seems clearly aimed at requiring body scanning for all air travelers, no matter what.
More U.S. Airports Proposed for Privatization
Three more U.S. airports have emerged as candidates for privatization in recent weeks, in addition to Chicago Midway, New Orleans Louis Armstrong, San Juan Luis Munoz Marin International, and Briscoe Field near Atlanta. New additions to the list are Baltimore Washington International, Ontario International near Los Angeles, and Van Nuys Airport in Los Angeles.
BWI was put into play by a statement from Gov. Martin O’Malley in mid-January. The Financial Times (Jan. 14, 2010) reported the governor saying that the state is open to acquisition offers and would also consider the possibility of an initial public offering (IPO) for BWI. His comments came at a cybersecurity summit organized by the National Institute of Standards and Technology. Although IPOs have been used for airports in Europe and Mexico, they have not previously been proposed for a U.S. airport. Given that current federal law permits only the long-term lease of air-carrier airports, such an IPO would presumably be for an operating company whose life would be limited to the length of the lease.
The Ontario trial balloon, reported in The Press Enterprise (Riverside, CA) Feb 1, 2010, was included in a memo from the Mayor of Los Angeles and five City Council members “urging the city administrative officer to solve a gaping budget gap of $200 million in the current fiscal year.” Other privatization candidates in the memo included such “non-core assets” as the convention center, golf courses, Van Nuys Airport, and the zoo. The CAO’s office told the newspaper that it will take several months to research these possibilities.
The Van Nuys privatization idea originated not with city officials but with airport tenants. The Van Nuys Airport Association in December asked Los Angeles World Airports director Gina Marie Lindsey to freeze proposed rent increases and consider turning over management of the airport to a private company that might run the airport more efficiently, according to a Dec. 17, 2009 article in the Los Angeles Times. A number of airport privatization proposals in the 1990s failed due to opposition from airport users; this is the first example I know of where the users themselves have initiated the idea.
As for Chicago Midway, the city requested—and received—from the FAA a three-month extension of time to submit a new timeline for its revived attempt to privatize that airport; their new deadline is May 1st. City advisor John Schmidt told Dow Jones Newswire in early January that the city intends to complete the deal before the end of this year. New Orleans is expected to issue an RFQ for an independent valuation of the airport this month, and the new Puerto Rico Public-Private Partnerships Authority told Public Works Financing that it aims to issue an RFQ by the end of March. Finally, the Gwinnett County Board of Commissioners on Jan. 19th voted to submit a preliminary application to the FAA for the general-aviation airport slot in the Pilot Program.
One potential fly in the ointment is the FAA reauthorization bill slowly making its way through Congress. The House-passed bill contains an anti-privatization provision that would (1) increase the airline approval requirement from 65% to 75%, and (2) make privatized airports ineligible for federal AIP grants, putting them at a funding disadvantage compared with other airports. The Senate Commerce Committee bill has no such provision, so if it passes as written, the privatization question will have to be addressed at the conference committee stage. I would prefer to see the Senate Finance Committee (where the bill now rests) up the ante by expanding the Pilot Program from the current 5 airports to 15, and reducing the approval percentage to 51%. If nothing else, that would give privatization proponents a stronger bargaining position at the conference committee.
Some Progress on Watch Lists
In last month’s issue, written a week and a half after the thwarted Dec. 25 underwear bomber incident, I called for a more risk-based approach to aviation security, one element of which would be to put a larger fraction of the 550,000 names on the DHS’s consolidated terrorist watchlist (TIDE) database onto the 14,000-name selectee list. Despite alarms raised by civil liberties groups, putting more people about whom there are serious security concerns onto a list that requires more careful screening is not a restriction on their freedom to travel by air; that’s what the 4,000-name no-fly list is for. It would simply be one of a number of sensible steps toward bringing relatively more resources to bear on those more likely to be dangerous, and expending relatively fewer resources on those highly unlikely to be threats.
I’m pleased to reports that some steps in that direction are being taken, as set forth in recent Senate and House hearings. At a Jan. 20th Senate Homeland Security Committee meeting, Director of National Intelligence Dennis Blair and the Director of the National Counterterrorism Center both said that the current means of shifting people to the selectee and no-fly lists is bogged down by a bureaucratic process initiated in the last year of the Bush administration and reaffirmed by the Obama administration. Leiter told the senators that they will soon have new interagency guidance on revised watch list standards. And on Jan. 28th, DHS Deputy Secretary Jane Holl Lute told the House Homeland Security Committee that DHS is working with other security agencies to revamp the watchlist process, including adjustments to the process for adding names to the selectee and no-fly lists.
At the same House hearing, the Government Accountability Office also weighed in. GAO noted that TSA still (as of now) does not have the capability to check passengers against all records in TIDE, but that this capability will finally exist once all airlines have implemented the new Secure Flight system, a process that is now under way. Under Secure Flight, the TSA will take over the name comparison function from the airlines, with added passenger information (complete legal name, gender, and date of birth) to reduce the number of false matches. Apparently the general operating rule will be for TSA to check against the (expanded) selectee and no-fly lists under normal security conditions, but to make use of the full watchlist when conditions warrant.
Maximizing the Value of Airport Land: BWI vs. DFW
Two large airports are taking diametrically opposite approaches to the use of non-aviation related land within their borders. Baltimore Washington International is planning to sell 275 surplus acres, while Dallas/Ft. Worth International is planning to make money from about 6,600 acres on its fringes (out of 18,000 total acres).
Many airports have acquired acreage larger than needed just for their aeronautical activities, generally for noise buffer reasons. But as improved jet engine and aerodynamic technology has led to smaller noise footprints for each new generation of jet airliners, some of that land is no longer needed for this purpose. In February 2008 the FAA told airports nationwide to develop comprehensive plans for reusing land no longer needed for noise buffer zones.
In BWI’s case, the land in question was acquired with $29 million in FAA noise funding plus $7 million of airport money, starting in 1985. BWI plans to have the land surveyed and appraised and will then offer it for sale, at fair market value. None will be zoned for residential purposes. Apparently, the FAA will not require repayment, but will allow BWI to use its share of the original cost for future airport projects; the balance will go to the state of Maryland, which owns the airport.
DFW, being newer and much larger, was planned from the outset with large buffer zones, accounting for more than one-third of its total acreage. And while it may not need all of that for noise buffering these days, it is not planning to shed any of it. Instead, it aims to develop those lands for compatible commercial uses to increase its non-aviation revenue percentage. That will help keep its charges to airlines and other users lower than they otherwise would be. DFW’s CEO Jeff Fegan told Airport Business last fall that key development objectives include more business parks, more entertainment and hospitality businesses, and improved facilities for corporate jets and other general aviation. Because much of the available land lies within the city limits of four surrounding cities, DFW has negotiated tax-sharing agreements with them, under which approximately half the tax revenues from new development there will be shared with the relevant city government. DFW has already earned one-time revenues of $200 million for natural gas drilling rights, and expects annual royalty payments for many years to come.
I don’t mean to imply that one of these approaches is better than the other, or that different situations might not lead to different decisions. BWI’s approach would be commended by the “stick-to-your-knitting” school of management consultants, and has interesting parallels with the early years of privatized BAA in the U.K. In those early years, the company had an active property development and management business, but that proved to be a business BAA was not very good at, so it sold it off. On the other hand, BWI could be criticized for reaping only one-time gains from its non-aeronautical land, compared with the ongoing revenue streams DFW hopes to create from its comparable lands.
FAA OKs PFCs to Pay for Common-Use Kiosks
Historically, the FAA had not allowed airports to use money derived from passenger facility fees (PFCs) to pay for common-use kiosks—like those at Las Vegas McCarran International which allow passengers to use any kiosk to check in with any airline. That stemmed from FAA having categorized adding such kiosks as “terminal development,” which is inherently a revenue-producing category—and hence a no-go for PFC funding. But in December, FAA re-categorized such kiosks as part of “gates and related areas,” to which no revenue-producing restriction applies. Hence, the kiosks can now be acquired with PFC monies.
First Canadian Airport Privatization?
Hamilton, Ontario is the site of Canada’s 15th-largest airport (by passenger enplanements)—Hamilton International. Originally an RAF training station, it was turned over to the city by the federal government in 1994, as were most Canadian passenger airports. The city outsourced airport management to Tradeport International, which more than tripled its passenger numbers in the following decade. In January, city council member Chad Collins introduced a motion to consider selling the airport and using the proceeds to upgrade aging city infrastructure. Although Toronto International used a public-private partnership deal to develop its new Terminal 3 in the late 1980s, no Canadian airport has been leased or sold to investors. If it goes through, Hamilton would be the first.
More Air Marshals in TSA Budget Request
In a response to the Christmas underwear bomber incident, the Transportation Security Administration has requested $85 million to expand the air marshal program on international flights. I hope someone in Congress asks for analysis of the cost-effectiveness of adding more air marshals. I reported in Issue No. 44 the results of a cost/benefit analysis by Mark Stewart and John Mueller, suggesting that air marshals are one of the least cost-effective of all TSA aviation security measures, a view that is widely shared among security experts.
New Book on Aviation Security
Let me call to your attention a new book, Protecting Airline Passengers in the Age of Terrorism, edited by Paul Seidenstat and Francis X. Splane (Praeger Security, 2009). Its 14 chapters cover a wide range of aviation security topics, and the authors are not all in agreement, providing much food for thought. I contributed one chapter to the book.
Pension Fund Buys Stake in Gatwick
South Korea’s National Pension Service is purchasing a 12% stake in London Gatwick International Airport from Global Infrastructure Partners. The latter purchased 100% of the airport from BAA Airports last fall for $2.4 billion. National Pension Service is paying $156 million for its 12% stake, suggesting either that they are getting a very good deal or that GIP overpaid. NPS is seeking to diversify its holdings internationally, and to put 10% into real estate and infrastructure by 2014.
Airport Parking Company Files Chapter 11
The country’s largest off-site airport parking firm filed for bankruptcy late in January. Parking Company of America Airports LLC cited liabilities more than twice as large as assets. It operates parking facilities near 31 airports (including seven of the ten busiest), totaling over 40,000 spaces. The parking company is indirectly owned by Macquarie Infrastructure Company LLC. At least one potential buyer has stepped forward, Bainbridge ZKS-Corinthian Holdings.
“The economic downturn has clearly demonstrated the benefits of what I would call the business transformation of European airports—a process that has seen them evolving considerably over the last 15 years. From mere infrastructure providers focused on the national airline and dependent on public finances, European airports are now full-fledged, self-financed, and diversified businesses. This transformation has been key for airports in coping with their worst-ever trading conditions. In particular, the diversification of their activities and a strong focus on cost-cutting, including an unprecedented level of staff reduction, has allowed airports to maintain extremely competitive charges for airlines while confirming the bulk of their capital investments—standing at €50 billion up to 2013. . . . deliver[ing] the facilities that will be needed by airlines and their communities once the rebound is there.”
--Olivier Jankovec, Director General, ACI Europe, Airports, Jan. 5, 2010
“As long as U.S. airport security relies on screening techniques that are only moderately invasive, there will be holes that innovative attackers will be able to exploit. While screening technology is advancing, there is nothing in the foreseeable future that would be able to do more screening with less invasiveness. The U.S. prison system grapples with the same problem, and even there, where inmates are searched far more invasively than air travelers, contraband is still able to flow into facilities.”
--Fred Burton and Ben West, “Airline Security: Gentle Solutions to a Vexing Problem,” STRATFOR Global Intelligence, Jan. 13, 2010
“It is not actually DHS or TSA employees who are at fault for [wasteful] decisions. From the very beginning, security experts and even the agencies’ own inspector generals have pointed to the absurdity of TSA and DHS spending patterns, many of which are driven by the latest scare story. . . . And from the very beginning, Congress has fought back against critics, repeatedly allocating funds to unnecessary local projects, reacting to sensational news stories, spending money in ways that suit its members, and then declaring itself shocked—shocked!—to discover that our multibillion-dollar homeland security apparatus was unable to stop a clearly disturbed Nigerian from boarding a Detroit-bound plane.”
--Anne Applebaum, “Screen Gems: What Are We Getting for All the Security Funding?” Washington Post, Jan. 5, 2010
“Americans are, by and large, a courteous bunch. . . . Yet in a survey commissioned by the travel industry, more than half of visitors found American border officials rude and unpleasant. By a two-to-one margin, the country’s entry process was rated the world’s worst. This is not a problem only for whingeing journalists and other foreign riff-raff. It is also a problem for America. The system is geared toward keeping out a tiny number of terrorists. Fair enough—such people should indeed be kept out. But there should be a trade-off. An immigration official lives in fear of admitting the next Mohammed Atta, but there is no penalty for excluding the next Einstein, or for humiliating tourists who subsequently summer in France. Osama bin Laden has arguably inflicted more harm on America indirectly than directly. To stop his acolytes from striking again, the government has made entering America far more difficult and degrading than it need be.”
--Lexington, “Bin Laden’s Legacy,” The Economist, Jan. 16, 2010