Lowfare Service Effects: Harrisburg to Orlando

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BAGGAGE SCREENING INVESTMENT STUDY
Aviation Security Advisory Committee (ASAC)
May 3, 2006
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Objective of the Baggage Screening Investment
Study

• Establish, in consultation with industry
  partners, a strategy for facilitating the
  installation of cost-effective checked baggage
  screening systems, consistent with Congressional
  mandates, including the identification of
• Cost-saving approaches,
• Alternative funding sources,
• Recommended enabling legislation, and
• Mechanisms for ongoing effective collaboration
  throughout planning, design, construction, and
  operation

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Why Are We Doing This?Legislative Background

• The Intelligence Reform and Terrorism Prevention
  Act of 2004 requires a baggage screening funding
  study
• The 2005 DHS Appropriations Act Conference Report
  directs TSA to comprehensively plan for
  expediting the installation of in-line EDS in
  consultation with aviation stakeholders
• The March 15, 2005 GAO Report recommends that TSA
  work with airport operators to develop plans for
  installing in-line systems

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Required byIntelligence Reform and Terrorism
Prevention Act of 2004
SEC. 4019. IN-LINE CHECKED BAGGAGE SCREENING. (a)
IN-LINE BAGGAGE SCREENING EQUIPMENT.The
Assistant Secretary of Homeland Security
(Transportation Security Administration) shall
take such action as may be necessary to expedite
the installation and use of in-line baggage
screening equipment at airports at which
screening is required by section 44901 of title
49, United States Code. (b) SCHEDULE.Not later
than 180 days after the date of enactment of this
Act, the Assistant Secretary shall submit to the
appropriate congressional committees a schedule
to expedite the installation and use of in-line
baggage screening equipment at such airports,
with an estimate of the impact that such
equipment, facility modification, and baggage
conveyor placement will have on staffing needs
and levels related to aviation security. (c)
REPLACEMENT OF TRACE-DETECTION EQUIPMENT.Not
later than 180 days after the date of enactment
of this Act, the Assistant Secretary shall
establish and submit to the appropriate
congressional committees a schedule for replacing
trace-detection equipment, as soon as practicable
and where appropriate, with explosive detection
system equipment.
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Intelligence Reform Terrorism Prevention Act of
2004
(d) COST-SHARING STUDY.The Secretary of
Homeland Security, in consultation with
representatives of air carriers, airport
operators, and other interested parties, shall
submit to the appropriate congressional
committees, in conjunction with the submission of
the budget for fiscal year 2006 to Congress under
section 1105(a) of title 31, United States
Code (1) a proposed formula for cost-sharing
among the Federal Government, State and local
governments, and the private sector for projects
to install in-line baggage screening equipment
that reflects the benefits that each of such
entities derive from such projects, including
national security benefits and labor and other
cost savings (2) recommendations, including
recommended legislation, for an equitable,
feasible, and expeditious system for defraying
the costs of the in-line baggage screening
equipment authorized by this title and (3) the
results of a review of innovative financing
approaches and possible cost savings associated
with the installation of in-line baggage
screening equipment at airports
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Why Are We Doing This?Existing Challenges

• Increase EDS use during peak demand periods to
  speed throughput and minimize staff requirements.
• Provide scalable systems to match projected
  traffic growth
• Maintain 100 screening compliance given traffic
  growth
• Emerging screening technologies combined with
  improved baggage screening system designs will
  significantly improve the economic case for
  automation investments
• With current investment levels, another 20 years
  would be required to complete the installation of
  optimal systems
• Without program acceleration, there will be
  substantial throw away investment for life
  cycle replacement and refurbishment of suboptimal
  systems

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How Are We Doing This?Collaborative Approach to
the Study

• Aviation Security Advisory Committee (ASAC)
  sponsorship for the study
• Comprehensive engagement of industry stakeholders
  on baggage screening investment issues
• Technical Team, Finance Team and Steering
  Committee
• Regular industry association (ACI, AAAE, ATA)
  briefings on progress
• Duration through May 06

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Baggage Screening Investment Study Context
Strategic Plan Framework
Baggage Screening Investment Study
Industry Steering Committee as a Working Group of
ASAC
Refined Strategic Plan
Airport-Specific Concept Plans
Refined Design Guidelines
Funding Levels, Funding/Financing Strategies,
Legislation
Airport-specific Working Groups
Coordinated Plans, Designs, and Funding
Approach for each Airport
ASAC - Aviation Security Advisory Committee
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Steering Committee Members
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Technical Team Members
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Financial Team Members
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Key Tasks in the Baggage Screening Investment
Study

• Define investment benefits and costs for all
  parties
• Collect airport/airline cost and benefit data
• Refine government cost and benefit data developed
  in recent studies
• Develop funding and financing model
• Identify and evaluate innovative funding and
  financing alternatives alternatives
• Recommend Legislation (if required)
• Establish methodology for ongoing stakeholder
  involvement
• Publish refined design guidelines

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How are we doing?
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Cost v. Benefits

• Significant, but not quantifiable
• Even excluding them, expedited investment reduces
  the program cost by 1B over 20 years through
  staff savings

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Technical Team Findings

• Cost for baggage handling systems
  infrastructure is largest cost hurdle to
  implementing optimal systems
• Approximately 4.0 Billion in capital funding
  will be required to complete the deployment of
  optimal screening systems
• At current rates of investment, optimally-scaled
  EDS in Cat X-III airports will not be completed
  until approx. 2024
• Traffic growth stresses current inefficient
  systems
• Life-cycle reinvestment needs inhibit ability to
  make significant progress on facility/infrastructu
  re changes to accommodate new systems
• Increasing capital investment now could expedite
  completion of optimal system installation and
  save over 1 Billion PV
• Life-cycle cost of program lowered primarily by
  taking advantage of staff savings
• Majority savings to federal government
• Significant increased cost to industry through
  increased OM

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Finance Team Findings

• Funding sources and financing options are two
  different things
• Many interesting financing optionsbottom line
  reality is someone always has to pay
• Industry / travelers
• Federal government / taxpayers
• User fees currently offsetting approx. 50 annual
  aviation security costs
• Economic benefits of expediting installation of
  optimal EDS accrue largely to TSA
• Looked for financing options to minimize
  additional cost to industry

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Finance Team Recommendations
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Next Steps

• Evaluate feasibility of funding/financing options
  by developing case studies
• Establish ongoing stakeholder involvement program
  for implementation
• Complete work w/ industry May 2006
• Report to ASAC and TSA including recommended
  legislation if required June 2006