"Government Siding towards Replacing Security Firms at Airports"

Tuesday, September 25, 2001

Government Siding towards Replacing Security Firms at Airports
World Airport Week


Stronger evidence was presented last week for the federal government to
congressional leaders and the industry agreed that low-bid private
security firms should not man the front lines of the nation's aviation
security system. 

"We are past the question of whether and are now focused on the question
of how" to incorporate the federal role of airport screening, said
Secretary of Transportation Norman Mineta in congressional testimony
last week. 

Even more, Mineta said he has asked government lawyers about the
legality of breaking the contracts between the airlines and private
security companies - effectively throwing the companies out of the
airports. 

Already, efforts are being made to increase screeners' professionalism -
with experience, expertise, higher wages and a career path. Senate
Commerce Committee chairman Ernest Hollings, (D-SC), introduced
legislation Friday to have the government take over the security
screening at airports with increased training and testing for screeners.
The bill would impose a $1 per passenger surcharge to pay for the costs
of increased security. 

"The current system of aviation security is a hodgepodge system of
shared responsibility among the air carriers, security subcontractors,
the airports, and the federal government," Hollings said. "Make no
mistake - lines of responsibility need to be more clear. I have said for
years that we need to professionalize the 18,000 screeners in our
nation's airports who are employees of the airlines and the screening
companies. We need to make them federal employees. We need to give them
better training and advanced security equipment." 

John Kelly, CEO of Alaska Airlines [ALK], balked at a passenger
surcharge for security during the House Transportation and
Infrastructure Committee hearing, stating that fare competition could
lead passengers to resist flying if up to $3 was added to each ticket. 

That comment drew the ire of Rep. Peter DeFazio (D-OR). "You're telling
me that after this incident, that a $3 surcharge is something that would
trouble any flyer in your system?," DeFazio asked. "I don't believe
that. The government is the people and the people are willing to pay a
little bit more for their airplane tickets." 

Rep. Wayne Gilchrist (R-MD), agreed that a security surcharge clearly
labeled on the passenger ticket stub could be a reassuring factor to the
public, since security will now be the critical factor in a potential
traveler's decision to fly. 

The aviation industry's major action last week was the passage of a $15
billion federal bill to provide airlines funds to financially stabilize
themselves. The financial aid package includes a $5 billion cash
infusion and $10 billion in federal loan guarantees. It absolves
carriers from liability for claims as a result of property damage from
the hijackings, and limits airlines' liability for loss of life on the
ground. 

The airlines have seen their capital holdings drained since the horrific
terrorist attacks. Together, the airlines claim they will lose more than
$8 billion this month alone. Load factors have averaged around 30
percent since carriers resumed flights. Delta Air Lines [DAL] CEO Leo
Mullin said it will probably take his airline at least a year to reach
pre-Sept. 11 passenger figures. 

The $5 billion in direct grants will be allocated based on an airline's
available seat miles. Delta will receive the highest share of funds at
around $750 million. 

A federal board will decide how to allocate the $10 billion in loan
guarantees. The board, under the direction of the Office of Management
and Budget, likely will try to direct the loans to airlines that have
the best chance of surviving. The bill also authorized $120 million in
spending to ensure that essential air service will be continued for
small communities. 

The airline industry was thrown into further chaos last week when
investment firm Morgan Stanley sent a letter to Treasury Secretary Paul
O'Neill forecasting a non-existent capital market for the airlines. 

"There will be no functioning capital markets for the U.S. airline(s)
until the uncertainty with respect to both liquidity and liability are
eliminated. Even then, access is likely to be severely limited until the
path to a more normalized airline system becomes clearer," the letter
said. 

Passenger air carriers will divide 90 percent of the funds, while cargo
carriers will split 10 percent amongst themselves. Passenger airlines
have been restricted from carrying belly-hold cargo and mail since Sept.
11, which has resulted in a loss of between 4-5 percent, said Richard
Anderson, Northwest Airlines [NWAC] CEO. Cargo carriers can expect a
bump in short-term traffic, said Fred Smith, CEO of FedEx [FDX]. 

On Thursday, Tom Horton, chief financial officer of American Airlines
[AMR], said his carrier is covered for loss of its aircraft and loss of
lives of crew and passengers on the hijacked flights. 

The airlines estimate they will see a net loss of $24 billion over the
next year. The market plunge has three airlines on the brink of going
under, including America West Airlines [AWA], according to company CEO
Douglas Parker. The other two airlines are widely believed to be US
Airways [U] and Continental Airlines [CAL], according to press accounts.


Airlines have already announced employee lay-offs reaching a staggering
100,000 people. Aircraft manufacturer Boeing [BA] said it could lay-off
as many as 30,000 employees as orders are cancelled. 

It's no doubt the downturn has affected airports. The Federal Aviation
Administration (FAA) is considering bending the rules of the Airport
Improvement Program (AIP) to allow airports to use government funds for
security improvements. 

Those funds could be essential since airports likely will see reductions
in their top money makers - rent, landing fees, parking and concessions.
Airports may also face capital costs in reconfiguring their facilities
to comply with new security measures, such as moving concessions and
parking. 

Many Security Options 

Other measures being considered in the rush to heighten aviation
security include a massive increase in the number of federal sky
marshals, reinforcing of the cockpit door, separation of the cockpit
compartment from the main cabin and limiting the number of carry-on
baggage items. 

A much-needed improvement is the increase in data sharing between the
intelligence agencies and the aviation community. Data sharing was at
fault on Sept. 11, as the FAA was not notified by the Immigration and
Naturalization Service (INS) about the threat of individuals on the
nation's terrorist watch list, Mineta said. Therefore, the individual
terrorists were never in the Computer Assisted Passenger Prescreening
System (CAPPS) that profiles passengers in an effort to select them for
additional security measures. 

An example of the poor effort private security firms can put forward was
highlighted by DOT Inspector General Kenneth Mead. Mead said Argenbright
Security was ordered to pay fines and restitution of $1.5 million last
October by a federal judge for falsifying background checks on 1,300 of
its security- screening employees at Philadelphia International Airport
(PHL) from 1995 to 1998. Some of the employees turned out to have felony
convictions for drug dealing, kidnapping and aggravated assault and
theft. 

Argenbright now provides screening services for American Airlines and
United Airlines [UAL] at 48 airports. The firm still retains the
American contract at Philadelphia. 

Furthermore, DOT has discovered that Argenbright employs a substantial
amount of screeners at Washington Dulles International Airport (IAD) who
are not U.S. citizens. Mead said about 80 percent of Argenbright
screeners are not citizens at the airport where one of the airplanes was
hijacked Sept. 11. 

Rep. Harold Rogers (R-KY) was shocked at the figure. New immigrants with
potentially limited English language skills should not be relied upon
for an important security role, he said. 

Under federal law, only U.S. citizens or holders of green cards or work
permits can work at security checkpoints or enter secured areas of
airports, where access to airplanes is unlimited. 

Together, the inspector general and Immigration and Naturalization
Service are interviewing screeners and baggage handlers at Dulles to see
if they are legally in the country. If they are undocumented workers,
they should not have been able to obtain their airport jobs. 

"With the airlines in trouble financially, they're not going to move
ahead aggressively" on security measures, said Rep. Frank Wolf (R-VA).
"We need to federalize the inspection service immediately, including
baggage and background checks. We don't contract out the FBI, we don't
contract out the Customs Service, we ought not contract out this." 

Armed with such evidence, Congress last year increased background
screening requirements, ordering checks for all employees, not just
those whose applications aroused suspicions. It also expanded the list
of criminal offenses that disqualify applicants from holding airport
jobs. 

The screening system is one of the biggest aviation security problems
that exists today, said Gerald Dillingham of the General Accounting
Office (GAO). Dillingham said that studies show the problem has existed
for more than 20 years. In 1978, screeners missed one in every 10 threat
objects the FAA used to gauge performance in tests. The airlines and FAA
at that time called the results "significant and alarming," he said. In
1987, screeners missed two in 10 objects in tests and evidence shows in
the 1990s that screener performance in some cases has gotten worse. 

On top of that, the turnover rate that reaches nearly 100 percent on
average for the nation's busiest airports leaves very few experienced
people searching passengers and baggage. 

In a June 2000 report on screeners' performance, the GAO released the
following screener turnover rates for the top airports from May 1998 to
April 1999: 

   * Atlanta Hartsfield - 375 percent

   * Baltimore-Washington - 155 percent

   * Boston Logan - 207 percent

   * Chicago O'Hare - 200 percent

   * Dallas-Ft. Worth - 156 percent

   * Denver - 193 percent

   * Detroit - 79 percent

   * Honolulu - 37 percent

   * Houston Intercontinental - 237 percent

   * Los Angeles - 88 percent

   * Miami - 64 percent

   * New York Kennedy - 53 percent

   * Orlando - 100 percent

   * San Francisco - 110 percent

   * San Juan - 70 percent

   * Seattle - 140 percent

   * St. Louis - 416 percent

   * Washington Dulles - 90 percent

   * Washington Reagan National - 47 percent

As tests get more realistic to what a terrorist may try to carry through
the security station, screeners' performance declines significantly,
Dillingham said. 

The GAO said the high turnover rate can be attributed to the low wages,
minimal benefits and daily job stress. Screeners generally get paid
around minimum wage. 

Dillingham said some obvious lessons can be learned from Europe's use of
nationalized security personnel at airports. First, European screeners
are generally more qualified and have better training, as well as
receiving higher pay and better benefits. 

Second, different techniques are often used, including physical
pat-downs of passengers that prove to be very successful in discovering
foreign and illegal objects. 

Third, the government's authority for oversight brings significantly
lower turnover. There is also evidence that screeners perform better on
the job, he said. 

Going forward, Dillingham said he would like to see several initiatives.
Carry-on luggage should be limited to one bag per passenger with an
increase in manual searches by screeners. Limiting the amount of baggage
will put less stress on screeners to hurry passengers along through the
security process when long lines develop. 

Next, all airline and airport employees and screeners at airports should
be screened. That includes food service workers, mechanics, ramp
workers, vendors and store employees, while limiting their access to
"sterile" areas beyond security checkpoints. 

Third, he said intelligence should be strengthened to better inform and
update the aviation community when wanted criminals or people on watch
lists enter the country. 

Lastly, the FAA should complete security company regulations that are
currently held up at the OMB while government officials digest the
recommendations once again, he said. The regulations are almost three
years late and are being reviewed in the wake of the attacks. 

Dallas-Ft. Worth International Airport (DFW) officials also made public
suggestions last week. The airport is urging Congress to federalize
security at passenger checkpoints and order retroactive background
checks of all airline personnel and other individuals with access to
airport ramps and secure areas. DFW also is asking Congress to expand
use of the passenger facility charge and AIP to fund new security
measures. 

Several of the heightened security measures DFW has implemented are
above and beyond the FAA's current mandates. These steps were taken in
cooperation with airlines, concessionaires, the FAA, the airport said. 

Presently DFW airport has: 

   * Closed all automated "airline only" entrances. All terminal and
airlines
employees - from kitchen staff to pilots - are now required to pass
through the passenger security checkpoints or undergo additional
security screening before reporting to work beyond the security
checkpoints. 

   * Halted airport employee trains. All employees must use the public
airport
trains and pass through security checkpoints or undergo additional
security screening. 

   * Verified an employee's credentials on the spot, and be sure the
badge is not
forged or invalid, by moving badge-checking equipment to passenger
security checkpoints. 

   * Removed all knives and other cutting instruments from kitchens and
back
storage areas of restaurants and stores. That initiative also goes
beyond the new FAA mandate that no one entering the terminals will be
allowed to bring knives, pocketknives, box cutters, blades or scissors
past the security checkpoints. Concessionaires have removed all knives
and metal cutlery from the terminals and may provide plastic cutlery to
their customers. 

Security Trade Groups Make Suggestions 

Suggestions also came from the Service Employees International Union
(SEIU), the largest union of security employees in the U.S. and the
largest union in the AFL-CIO. In its five-point bulletin, SEIU called
for airports to work with the federal government to hire and manage
screeners, while making screeners unionized to have a stronger voice in
labor and security issues. The union would also like to see screeners
pay increase and more equipment be provided for screeners to perform
their jobs better. 

The International Association of Professional Security Consultants
(IAPSC), a non-profit international association of security experts,
supported the federal government's notice that security measures be
tightened at our nation's airlines and airports. The IAPSC recommends
that airports and airlines consider measures including a single
controlling authority to remove the layers of security jurisdiction from
the airport. 

The group also would like to see restricted commerce beyond security
checkpoints. Passengers will not be able to purchase certain items that
could be used as weapons. 

IAPSC considers issuing smart cards or enhanced forms of frequent flier
identification cards for passengers and crew to be used as a means of
identification upon arrival at the airport and as a means of processing
at selected processing checkpoints. The consultants recommend that
biometric template/digital photo and encryption data be incorporated on
the smart card. Two airport security processing channels could be
created, one for people traveling with secure smart cards, and another
group without the card, who would be subject to more intense security
checks at traditional passenger screening checkpoints. 

The group also recommends strategically placed, overt and hardened
cameras for application within the main cabin. Cameras should be
electronically linked to monitors on the flight deck and in the
passenger galley area. These cameras would provide pilots and crew with
visual surveillance of both the flight deck and the passenger areas at
all times. Plus, the added electronics would provide the crew with an
immediate assessment of an incident in the cabin so the pilots could
take appropriate measures without compromising the controls of the
plane. 

One industry security expert also envisions cameras being used within
terminals as a way to passively observe travelers, much the way casinos
watch people who enter their facilities. The cameras could also use an
array of high- tech biometric data to target known criminals and
terrorists.

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