Security, cancellations to cost US airlines: View from America Pt I


While it is no surprise that the new Transportation Security Administration’s measures have created a world-wide furore – including a couple of diplomatic incidents – rising concern over the new procedures has prompted many to wonder if it is not time to overhaul transportation security.

Many experts believe, regardless of body scanners and pat downs, that international practices are too proscriptive and predictable and should be replaced with behavioural detection and a risk-based approach. Data-driven risk analysis is at the heart of modern aviation safety and should be at the heart of aviation security.

Part of the problem is Congress because most of its mandates are political, rather than risk-based. Despite this, little is actually being done although it is clear the new procedures could prove costly for airlines.

Indeed, the furore is something airlines ignore at their own peril since, historically, travel inconveniences have caused the exodus of no fewer than 41 million passengers, according to studies. Compounding this is the rising cancellations prompted by the three-hour tarmac delay rule.

These factors, as well as delays, conspired at the top of the last business cycle to cost US airlines USD9 billion. Indeed, the vitriol against the TSA suggests that will inevitably happen again at a time when airlines can least afford any barriers to travel.

Online reaction instructive

Reviewing the articles, and comments posted to them, is instructive especially given the language that is best illustrated by the new moniker assigned to TSA, among them Totally Stupid Agency or Total Sexual Assault. The resentment and disdain is not conducive to the respect teh agency requires for Americans to enlist in its latest efforts as it rolls out its “If you see something, say something” campaign.

“Sometimes terrorists are idiots, but TSA is always idiotic. I'm terrified of the TSA, not that my plane will be bombed,” said one commenter.

Many online comments said the agency should suspend the scanners not the Constitution. It is clear to travellers now, that, when it comes to the TSA, the emperor has no clothes. What the public is pushing for, and rightly so, is an effective method to protect against terrorism while protecting our constitutional rights.

Historically, articles on the web gain only a few comments, but just one article in The New York Times prompted many pages of posts with words such as "fascism" and "Nazi" easily slipping into the rhetoric. Many responses, from the critically important and travel savvy New York metropolitan market, pledged to forego further air trips.

While one can easily dismiss this as so much impractical bluster, the evidence suggests otherwise, and it is here that airlines cannot afford to ignore such pledges. Business aviation companies are reporting a strong uptick in demand. While this can be attributed to the improving economy, it is significant because studies tell us that airline inconvenience factors drove a 150% increase in business aviation during the last business cycle. Indeed, the Air Taxi Charter Association reported a 52% increase in demand Nov-2010 over Nov-2009.

Judging from the unusual number of comments as well as traffic on various websites, passengers have drawn a line in the sand and have clearly indicated that the TSA has gone too far.

Polls confusing

Five polls – CBS, Gallup, Trip Advisor, Travel Leader and the Wall Street Journal – have concluded that Americans overwhelmingly approve of the new machines, but more recent polls make that overwhelming support less clear. Whether or not the approval rating is based on the more-is-better theory is unclear, but most agree that effective is better.

Today, the artful term “security theatre” has edged its way beyond airline insider circles into the popular lexicon and gained common understanding that, while the airport security dance may look good, it is not very effective. Given that fact, it is little wonder passengers are growing more resentful as they face the new procedures.

More recently, a Zogby International poll concluded 42% said the new procedures would cause them to use a different transportation mode. An informal USA Today survey found 58% of frequent flyers disapprove of the pat-downs while 50% disapprove of the body scanners. Some 57% were “bothered or angry” about the pat-downs. The newspaper polled road warriors, some of whom stated categorically they were cutting back on air travel as a result. One told the newspaper not only was he cutting back on the 50 commercial trips taken annually but also had eliminated several because of the procedures.

The furore has made it easy to take potshots at the TSA but that doesn’t hold a candle to how pathetically easy it is to defeat the body scanners and the pat-downs as illustrated by researchers. The internet now is replete with studies questioning body scanner effectiveness as well as instructions on how terrorists can beat them. But terrorists do not need the internet to help them beat these simple machines.

Another post said: "It is not okay for a stranger to touch my junk to give you the illusion of a secure flight."

“Many USA Today Road Warriors say they've  experienced enough of the machines and the pat-downs to avoid them when they can,” wrote the newspaper.

And therein lies the problem for airlines. While anecdotal evidence is not scientific, the vitriol, objections and frustration expressed by the comments was surprising. Quite a few pledged not to fly again and they are just joining the bandwagon that began at the peak of the last cycle.

The New York Times posts and other comments may be a statistically small sample as is the 900 complaints received by the American Civil Liberties Union and the 700 received by the TSA during the height of the controversy, but they are outsized when compared to the normal pipeline of comments.

Barriers to travel cost airlines 41 million trips

One only has to look back to the top of the last business cycle to see the impact of system problems – known as the "hassle factor" – on aviation. That factor – delays, cancellations, and security – are again conspiring to dampen demand, while ancillary fees become the icing on the cake for many.

A recent study showed that delays cost the economy USD33 billion annually. But there is more to that figure than just a straight look at the economic impact, and that is the inconvenience.

In the most comprehensive study to date, five universities, funded by the Federal Aviation Administration, concluded delays cost the economy USD32.9 billion annually, largely borne by passengers with disrupted travel plans. That included USD16.7 billion in lost time, inefficiency, missed connections and cancellations. The delays constituted a USD4 million drag on the nation’s economic output and cost airlines USD8.3 billion in 2007.

In perhaps the most interesting conclusion, the study indicated that previous measures used to estimate the impact on passengers are far below the actual cost to passengers. Based on 2007 statistics, as the industry was at the peak of the last up cycle, the study by the University of California Berkeley, University of Maryland, Virginia Tech, Massachusetts Institute of Technology and George Mason University, concluded that airline delays amounted to more than 28,000 years.

More ominous is a 2008 study by the US Travel Association (USTA) which conducted a survey finding passengers avoided 41 million trips in 2008 at a total cost to airlines of USD9 billion in revenues. The cost to the economy was USD26.5 billion which includes the USD6 billion lost to hotels and USD3 billion lost to restaurants along with the fact that federal, state and local governments lost more than USD4 billion in tax revenue. Couple that with USD33 billion in delay costs to the economy, and it is little wonder that business aviation continues to boom.

“Whenever possible I will drive rather than fly,” wrote more than one respondent. “I will not submit to pat-downs or government-assisted sexual assaults.”

And, indeed, business aviation did boom back then and observers are happy that today’s recovery is better than expected this year. In 2008, the Stanford Transportation Group (STG), a US-based aviation consultancy, indicating that business aviation had grown from 16% of all premium business traveller trips to 41%. While some of this can be attributed to the narrowing gap between front-of-the-aircraft fares and business aviation costs, STG suggests a lot was to do with the "hassle factor".

“The air travel crisis has hit a tipping point – more than 100,000 travellers each day are voting with their wallets by choosing to avoid trips,” said USTA President and CEO Roger Dow at the time, in an eerie reminder we are facing the same problems today. “This landmark research should be a wake-up call to America’s policy leaders that the time for meaningful air system reform is now. With rising fuel prices already weighing heavily on American pocketbooks, we need to find ways to encourage Americans to continue their business and leisure travel. Unfortunately, just the opposite appears to be happening.”

Blaming government does not translate into political action

The problem is that despite studies by travel organisations and the government, it is almost impossible for transportation to rise to the top of the political agenda no matter how much the public is aware of who is at fault. It is indeed strange with all that evidence, coupled with the fact that aviation contributes USD1.3 billion to the economy annually, that transportation – much less aviation – it cannot capture Congressional attention.

IN 2008, travellers put the onus squarely on the government, according to the USTA study, an astounding finding for that time given the complaints about airline service and the roll-out of ancillary fees. Indeed, it was shocking to see that travellers trusted airlines more than twice as much as the government to solve their problems. But the increased understanding of how government policies restrain trade, has never amounted to much when it comes to political action. But that may not be surprising since 61% believe solutions can be had from the marketplace versus the 33% who said government must solve the problems.

“America falls into pathetic, frothing fear hysteria and cedes more money/civil rights to terrorists (oh, excuse me, I meant TSA),” said a comment.

The study indicated it was the air travel process that caused the exodus. Delays were the top problem, according to respondents, but the next two included inefficient security screening and cancellations, both of which are once again at the top of the traveller agenda given the 18% increase in cancellations resulting from the tarmac rule.

USTA indicated that passengers are frustrated by the lack of action to solve government-imposed problems. Some 60% believed the air transportation system is deteriorating, while 48% of all frequent travellers who take more than five trips annually expected no improvement. In the two years since the study, virtually nothing has changed.

Coming in Part 2: How security should be handled.

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