Transportation Security Administrator John Pistole, Police Commissioner Raymond Kelly, Dave Barger, CEO and President of our airline host JetBlue Airways, our sponsors, ladies and gentlemen: Good morning. I am pleased to see such a full attendance after we had to reschedule this event owing to Hurricane Sandy.
New York means different things to different people. As we have seen demonstrated again over the last four months, it is a tough, resilient city whose citizens are capable of overcoming the worst calamities. It is also a melting pot of people and cultures; the center of global finance; the home to the United Nations General Assembly; and one of the world’s great cultural capitals.
And for aviation, the events of 9.11 will always be a reminder of the security challenges that our industry faces. Over time, the shadows from that terrible day may recede, but they will never leave us; nor should they, lest we slip into complacency about the deadly threats of terrorism.
Aviation is a unique and important industry. We connect the world—linking cultures, bringing people to business and products to markets. This makes us a catalyst for growth and development supporting 57 million jobs and $2.2 trillion of economic activity. By value, over 35% of the goods traded internationally are transported by air.
Without aviation our world would be a different, less connected and poorer place—both materially and in terms of the human spirit.
Aviation brings great value to the world, but it faces many challenges—financial included. Between 2003 and 2012, airlines took in $5 trillion in revenues. And we basically broke even. In line with that, the 2012 industry net profit margin was 1.0%. And we see that improving to 1.3% this year.
Despite the difficult decade that we have been through, the industry did not take its eye off of the ball on the top priorities of safety, security and sustainability.
- We committed to carbon-neutral growth from 2020 and to cut our net carbon emissions in half by 2050 compared to 2005.
- Last year was the safest in aviation history with an average of just one major accident for every 5 million flights on Western-built jet aircraft. And there were no hull losses with Western-built jets among IATA’s 240 member airlines.
- And I think that we can all agree that the industry has never been more secure.
That said, every activity comes with risk. Cross the street, take a shower, eat a meal, go to a conference and there is risk. That’s life. Air transport is no different. However limited, there is risk. That’s the theme of this conference: Risk and Regulation: Striking the Right Balance.
We cannot accept 100% risk. And any regulation that completely eliminated risk would shut the industry down—an equally unacceptable solution. A pragmatic approach is needed to balance the two. But I am not sure that we have achieved a common understanding with regulators on defining where that balance should be. That worries me greatly.
Why? Because if we don’t find that balance soon we will lose the goodwill of our passengers and shippers, clog our airports, slow world trade, and bring down the level of security that we have worked so hard to build-up. Moreover, the challenge is growing. This year more than 3 billion passengers will travel by air—almost double the number that flew in 2001. And all forecasts point to another doubling by 2030 with air cargo growing at a similar pace.
I believe that the prevailing one-size-fits-all proscriptive model for security is not sustainable. If we don’t evolve, the system will grind to a halt under its own weight.
That means changing our mindset:
- We must put desired results at the center of our efforts. If we want to keep bombs off of airplanes, it does not matter whether we use machines, dogs, intelligence or any combination thereof.
- We must understand that bureaucracy and rules do not equate to effective security. The Transportation Security Administration’s (TSA) consolidation of their Emergency Amendments for international carriers is a step in the right direction….and we need more of it.
- And we must recognize that 99.9999% (if not more) of passengers and freight pose no threat to aviation. So we need to make better use of the information that is available to assess the risk of the people, objects or situations that can pose threats.
These principles would lead to security that is driven by the desired outcomes not the processes, which is pragmatic not bureaucratic, and that is efficiently focused on mitigating risks rather than on mechanistically repeating procedures ad infinitum.
If that is utopia, where are we today?
We are spending a lot of money—some $8.4 billion a year and rising—to support a security system that has grown exponentially since 2001. And this is just what airlines spend, let alone the cost to passengers and on other parts of the value chain. This is well-intentioned spending. Air transport is secure. But there are inefficiencies. For example, even our most trusted employees and people with high-level security clearances are screened in the same way as our least known passengers.
Processes are cumbersome. Before 9.11 the average checkpoint processed 350 passengers per hour. Today it is below 150.
Resources are being stretched. The TSA admits it is concerned that we are running out of space to accommodate the growing footprint of the security areas at airports.
And customers are unhappy. IATA research found that wait times at checkpoints were the most frequently-cited gripe in the security process. The more cynical see the process as a Potemkin village. Our collective failure to get full buy-in from air travelers means that they are not partners in the process, merely silent and sometimes intimidated and resentful participants.
We have a growing problem. I emphasize “we”. Security is the responsibility of states but delivering it effectively requires the cooperation of the whole value chain. We are accountable to our passengers and they do not care if the delays and hassles they encounter are the result of government, airline or airport processes. All they remember is an unpleasant experience making them less willing to travel by air and sending ripples across the economy. With enough of those ripples a city may see connectivity decline.
Government and industry have a strong history of working together on safety. It’s a well-developed model for our collaboration on security. The Department of Homeland Security (DHS), for example, has revitalized its aviation security advisory committee and added an international subcommittee. I want to thank DHS Secretary Janet Napolitano and TSA Administrator Pistole for their leadership on this. There is still plenty of room to improve engagement between industry and government in the US and elsewhere, and this sets a good example.
Checkpoint of the Future
Collaboration will be critical to making the Checkpoint of the Future a reality. It aims to evolve airport passenger security screening to a more sustainable, efficient and effective process that leverages new technologies. It will do this by meeting three goals:
- Strengthening security by focusing resources based on risk levels, increasing unpredictability, making better use of existing technologies, and introducing new technologies with advanced capabilities as they become available.
- Increasing operational efficiency by raising throughput rates, optimizing asset utilization, reducing the cost per passenger, and maximizing space and staff resources.
- Improving the passenger experience by shrinking queues, reducing waiting times and replacing intrusive and time consuming screening with more pleasant technology solutions. Security should be hassle-free.
Could anybody disagree with these goals?
I am a strong advocate of the Checkpoint of the Future. And I am not alone. We have had strong endorsements by Administrator Pistole and the European Commission, the International Civil Aviation Organization (ICAO) and Interpol among many governments and international organizations. This support has facilitated very positive collaborative work:
- Airlines, airports, states, and manufacturers are providing strategic direction through an advisory group
- And expert groups are assessing the operational, technical, and policy impacts
Over 120 top experts are directly contributing to the Checkpoint of the Future in these formal structures. And many more are helping out indirectly. One of the findings from this process is that technology is advancing fast enough that we do not believe we will need a three-lane solution that you saw in first generation mock-ups. Everyone will go through the same screening lanes and equipment will automatically adjust.
Last autumn we released the Checkpoint of the Future Roadmap and Concept Definition. Today each of you will receive an executive summary that is also brought to life in a video highlighting the progress. The standard setting phase is over and we are now focused on implementation.
In fact, trials of important Checkpoint components with airport partners have already taken place. In Geneva we explored the use of biometrics to provide identity authentication of a traveler before they arrive at the checkpoint. At Heathrow we tested whether the passenger’s identity could be passed on to a remote camera for verification. And in Amsterdam Schiphol we tested new programs for screening equipment that have the potential to screen liquids and computers in carry-on bags—a priority for many travelers as our Global Passenger Survey showed.
For 2013, we are planning ten new trials that will support rollout of the first end-to-end Checkpoint in 2014.
Integral to the Checkpoint of the Future is the concept of differentiation to ensure that we deploy our resources where they will have the biggest impact on reducing risk. But you can only differentiate if you have the information for risk-based decisions.
As I said earlier, the vast majority of our passengers pose no security risk. Yet we screen them identically. We need a model that allows us to match limited security resources to the level of risk. We are not advocating for profiling based on religion or ethnicity…or proposing infringements on privacy. The proposal is to use information that is already being provided to governments for purposes of border control. Advance Passenger Information (API) and Passenger Name Record (PNR) information could also be used to provide automated guidance for decisions on the level of screening each passenger receives.
I appreciate that sharing information among governments is not simple. But agreements do exist among governments on PNR and API data. So it is also not impossible. Moving this discussion forward will be a primary focus for 2013.
In the meantime, passengers are already seeing some of what the future holds. Voluntary “Known Traveler” programs are already used by 25 or more immigration and security authorities. For example, TSA is rolling out PreCheck and Canada is expanding on the capabilities of the Nexus program. I would add that such programs maintain a random element to eliminate predictability.
IATA estimates that known traveler lanes can improve checkpoint throughput by as much as 30%. Creating a separate screening area for those travelers requiring additional attention will boost efficiency another 4-5%. That is a 34-35% increase in passenger processing capability, without adding infrastructure.
The Checkpoint of the Future must be built on global standards. These have underpinned our efforts on safety. But for security and facilitation, there is work to be done to develop new standards and use those that already exist. Fixing this will facilitate:
- The efficient deployment of new security technology,
- Information transfer, and
- Outcome based security.
Let me briefly illustrate the challenges.
- In the absence of global standards for equipment certification, developers face a plethora of differing national requirements that add cost and development time. And when regulators change detection standards mid-stream, promising technologies languish in laboratories.
- Information transfer is hampered by non-standard state requirements. We spent a decade developing global standards for information such as API and PNR with state institutions such as ICAO and the World Customs Organization. Now many governments are deviating from the standards—adding bureaucracy and cost to processes. Here are a few examples:
- Mexico requires seat assignment and baggage weight data.
- Jamaica and the Cayman Islands want to receive data ahead of the time when airlines could possibly send it.
- Some governments want paper copies of crew and passenger manifests even though electronic formats are readily available.
- We are working with Brazil and India to align data requirements with ICAO standards. In India this has been going on since 2008.
- And Japan and China have multiple windows for data reporting.
This is only a partial list. There is a huge amount of work to be done in this area.
- Too often the focus is on defining the process rather than the results. We must change our mindset to embrace global standards focused on desired outcomes. At the risk of over-simplification, if we can agree to a global standard outcome—no bombs on planes for example—then all stakeholders could focus their efforts on achieving the most efficient solution for a given situation and environment.
I must also spotlight another disturbing trend…which must not become a global standard. A number of governments are charging airlines data processing fees for compliance with their requirements. Canada, for example, requires airlines to invest in their systems to link to the government IT infrastructure. It then charges airlines about C$25,000 for the initial connection and C$5,000 annually to maintain it. Elsewhere, Oman charges US$1.50 per passenger and Qatar US$2.15. Last month, Thailand confirmed its intent to charge passengers a separate data processing fee for both outbound and return legs. Other countries are thinking about this as a way of offsetting their own costs—as if border control and national security were not a fundamental responsibility of governments. To all our government friends who may be contemplating similar action I would say: if you can’t afford to process the information, you shouldn’t be asking for it!
Before I conclude, let me say a few words on cargo security. We are being guided by many of the same principles as our work on passenger security. This means using global standards, risk-based analysis and working together, rather than a top-down, rules-driven, state-by-state approach. Mandates that are not aligned with the way the air cargo business actually operates will be impossible to implement effectively without eliminating the rationale for the business, which is speed of delivery.
We remain focused on a supply chain approach to screening that takes full advantage of the capabilities of all stakeholders.
One of the components of our overall strategy is Secure Freight. This industry initiative is aimed at providing guidance on cargo security, based on understanding the identity of the shipper and other members of the supply chain and ensuring that cargo is secured upstream and maintained in sterile conditions along its way. After successful testing, it is now being implemented in Malaysia. Among the countries scheduled to follow are Kenya, Mexico, Chile and the United Arab Emirates (UAE).
At the leading-edge of this is the Air Cargo Advance Screening (ACAS) program. The US Customs and Border Protection (CBP) and TSA launched this program in close cooperation with the airlines, freight forwarders, Airlines for America, IATA and other industry stakeholders. Under ACAS, CBP identifies a set of cargo data to be transmitted by the airline within given timelines. This is a significant step forward and could lay the foundation of future cargo security. But I am concerned that political pressure is being exerted to write laws before the testing phase is complete. We must do this right and not rush the rulemaking process. And when finalized, ACAS capabilities must be fully utilized in TSA air cargo rules, CBP inspection requirements and with international trading partners.
As with passenger security, the ultimate goal must be a harmonized global system. Last year saw significant progress such as the landmark agreements between the US, the European Union and Switzerland for mutual recognition of cargo security regimes. It was not easy and it took seven years of effort by regulators and industry stakeholders. But it will avoid redundant processes and allocate screening resources more effectively. I am pleased to see a similar agreement between the US and Canada. Agreements such as these will help define the future of cargo security based on globally recognized standards.
Early on I referred to a security utopia. This would see rigid requirements and formulaic processes replaced by an approach guided by realistic risk assessments, global standards and outcomes-focused targets. Air travel would be more secure. And we—industry and government—would be prepared to address efficiently and rapidly new and emerging threats in the knowledge of what data tell us.
Our success in safety has many lessons to point us in the right direction. Over decades, industry and governments have built global standards and processes that improved safety performance and adapted to emerging concerns. We have made aviation safer while also largely having processes invisible to the passenger. Passengers take safety for granted. That should be our inspiration for security—effective and hassle-free security for both passengers and cargo.
We have a big responsibility—keeping 3.1 billion air travelers, nearly 50 million tonnes of freight and the world’s economies connected. We must do this with the common goals of sustainability, safety and (as is the focus of this conference) security. The foundation for achieving these is working together. And I am sure that the dialogue here over the next days will move our work forward.
Lastly, I want to thank Dave Barger and all the team at JetBlue Airways for hosting us this week. I look forward to an exciting and productive exchange of views and opinions.