The Aviation Industry

1
The Aviation Industry

• A National Security Asset

2
Introduction

• Airports remain at particular risk for security
  breaches such as
• Damage to airport facilities
• Aircraft both in flight and on the ground
• Aircraft as missiles
• Air to ground missiles
• Necessary precautions
• Armor and locks on cockpit doors
• Electronic structure that prevents transponder
  from being shut off
• Screening of all airport employees daily
• Explosive detection equipment at all airports
• 100 screening of all passengers and cargo

3
Significant Developments

• April 1999 DOT reports that investigators were
  able to breach airport security 68 of the time.
• March 2001 FAA safety audit was deemed so
  problematic that DOT initiates its own
  investigation of the auditing process.
• April 2002 Private security firm Argenbright was
  fined 1 million for failing to meet security
  obligations.
• 2002 US government pursues Terrorism Information
  and Prevention System (TIPS) to promote citizen
  tips of suspicious conduct.

4
Importance of Air Transportation

• One of the most vital and fastest paced economic
  forces in the global economy.
• Technology must enable authorities to secure the
  airport environment while not delaying air cargo
  to the point where it is non-competitive with
  goods shipped by other means.
• The global economy depends on continued and
  uninterrupted service.

5
Airways

• 1912 Worlds First Commercial Airline
• Created by Ferdinand von Zeppelin
• Used Dirigibles to transport more than 34,000
  passengers before WWI.
• Post-WWI, European governments heavily subsidized
  airlines such as British Airways, Air France, and
  the Royal Dutch Airline, KLM.
• 1958 First year that U.S. airlines finally
  carried more passengers, as measured by passenger
  miles, than railroads

6
Development of the Aviation Industry

• WWI Aviation becomes an industry.
• U.S. built 17,000 aircraft and trained 10,000
  pilots.
• After the war, surplus aircraft were converted to
  civilian commercial use.
• 1925 Air Mail Act authorized the US Postal
  Service to award airmail routes to private
  contractors.
• 1926 Air Commerce Act provided for the
  certification of aircraft and airmen, the
  drafting and implementation of air traffic rules,
  and the creation of civil airways.
• 1927 government stopped operation its own airmail
  routes and transferred the business to commercial
  aviation. The government required air carriers
  to provide space for passengers in order to
  reduce the cost of mail transport and thus
  contributed to the airline passenger industry.

7

• 1938 Civil Aeronautics Act provided for the
  establishment of the Civilian Aeronautic Board
  (CAB) to set up routes, fares, and safety
  standards. The intent was to encourage the
  development of air transportation.
• 1978 Airline Deregulation Act permitted air
  carriers to set their own routes. By 1982 they
  were allowed to set fares as well. CAB was
  abolished and FAA was tasked with regulating
  safety.
• 1978 1979 Airplane crashes in San Diego and
  Chicago, along with rash of hijackings
  intensified public demand for more strict and
  expanded safety measures.

8
Facilities

• In the U.S.
• Larger airports are owned by cities, counties,
  states, or public corporations.
• Smaller airports are privately owned
• FAA regulates design and operations standards.
• FAA TSA regulate safety and security
• Two classifications of civilian airports
• Air carrier
• General aviation

9
Airway Routes

• Designated air space through which the movement
  of aircraft is controlled.
• High tech systems of navigational aids guide
  aircraft
• Two consequences of the rapid expansion of
  general aviation
• Heavy saturation of air space
• Overloading of airport capacity

10
Deregulation

• 1934 Airmail Act
• Created the Federal Aviation Commission to make
  recommendations to Congress
• 1978 Airline Deregulation Act

11
1938 Civil Aeronautics Act

• Implemented the FACs recommendations and laid
  out the plan for economic regulations
• Contained controls that mirrored regulations on
  the railroads and trucking industries
• Required to obtain certificates of public
  convenience
• Required to provide necessary and adequate
  facilities
• Routes could not be abandoned without prior
  approval
• Obligated to charge just and reasonable rates
• Provide safe and adequate service
• Rates had to be published for public inspection
• Changes required a 30 day notice
• Gave regulatory agencies the power to investigate
  unfair and deceptive practices
• Controlled the consolidations and mergers

12
1978 Airline Deregulation Act

• Purpose was to encourage an air transportation
  system that placed primary reliance upon
  competitive market forces as the basic
  determinant of commercial airline operations
• Allowed wide discretion in the setting of fares
• Dismantled the CAB and distributed its
  responsibilities between DOT, DOJ, and USPS.

13
Consequences of 9/11

• Between Dec. 31 2000 and Dec. 31 2001
• Percent negative change in stock value was
  substantial
• American -43
• United 65.3
• Northwest - 47.9
• Delta - 41.7
• US Airways 84.4
• Laid off 80,000 workers and grounded 20 of
  flights

14
Consequences cont.

• Many passengers are flying at small regional
  airports rather than larger international ones.
• Larger airports continue to have long security
  lines.
• Northwest Airlines lost 262 million in the first
  half of 2002
• Also in 2002, US Airways filed for bankruptcy,
  United Airlines lobbied for government support,
  most airlines made job cuts.

15
Consequences, cont.

• Revenue declined for all major airlines during
  the first half of 2002
• United Airlines -22
• U.S. Airways 24
• American Airlines 16
• From an equipment perspective, each of the four
  airplanes was insured for 2 billion 50 million
  for the airframe and the remaining amount for
  damage and liability.

16
Emergency Funding

• Air Transportation Safety and System
  Stabilization Act (ATSSA)
• Authorized 15 billion in expenditures
• Gave the airlines 5 billion in immediate cash
  assistance and 10 billion in loan guarantees.
• Contains a provision that limits the salaries of
  airline executives. Any airline that accepted
  the bailout money is prohibited from raising the
  salaries of its executives that make over
  300,000 per year for a specific period of time.
• Contains a provision of an additional 3 billion
  in support of enhanced security upgrades

17
Protecting Public Air Transportation

• Larger airports present an enticing target for
  several reasons
• They are typically crowded every day
• Airlines move on a schedule in predictable
  geographic patterns
• They are public facilities and resistant to
  target hardening
• Overall they are an attractive target because of
  the difficulty in providing adequate physical,
  personal, and operational security.

18
Protecting cont.

• September 2002 Congress voted to permit pilots
  to carry guns in the cockpit.
• April 2003 -- Training to arm pilots with .40
  caliber semi-automatic handguns began.
• Fall of 2002 29 people were arrested on federal
  charges of lying or offering false papers to get
  jobs at three Florida airports.
• May 2003 TSA allocated 2.3 billion to US
  carriers to offset security costs.