Aviation Security Impact Assessment Working Group ASIAWG Report to ASAC

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Aviation Security Impact Assessment Working
Group(ASIA-WG)Report to ASAC

• May 3, 2006

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Aviation Security Impact Assessment WG
TSA Administrator
ASAC Aviation Security Advisory Committee
ASIA WG Aviation Security Impact
Assessment Working Group
Membership AAAE, ACI-NA, ATA, Boeing, DHS, DOT,
TSA, Airbus, ALPA, CAA, NACA, RAA, NASA
USCAP - TWG (U.S. Commercial Aviation Partnership
Technical Working Group) Operational/Economic
Impact Analyses
RMAP - TWG (Risk Management Analysis Process
- Technical Working Group) Risk and
Effective/Efficient Countermeasures
Membership AAAE, ACI-NA, Airbus, ALPA, ATA,
Boeing, CAA, DHS, DOT, FAA, NACA, NASA,
NGATS/JPDO, RAA, TSA
Membership AAAE, ACI-NA, ATA, Boeing, DHS, DOT,
TSA

• ASME/RAMCAP
• DHS/USC-CREATE
• DHS/RNCSAA/DNDO
• LANL/LED
• DHS/Homeland Security Institute

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ASIA-WG Progress

• USCAP Operational/economic impact analyses
• Franz Edelman Competition
• Analysis example - baseline
• Analysis example - new security fee
• RMAP risk management analysis process/tool
  development
• Initial analysis process/tool/analysis
• Spiral updates

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USCAP - Franz Edelman Competition Press Release

• April 3, 2006 - The Institute for Operations
  Research and the Management Sciences (INFORMS(R))
  today announced five finalists that will compete
  for the 2006 Franz Edelman Award for Achievement
  in Operations Research. The winner of the Franz
  Edelman competition will be announced at a
  special awards banquet on Monday, May 1, 2006
• Each year, the Franz Edelman competition
  recognizes outstanding examples of Operations
  Research (O.R.)-based projects that have
  transformed companies, entire industries and
  people's lives. O.R. uses advanced analytical
  methods to make better decisions and is a
  disciplined way to improve almost any business
  situation in nearly any type of organization in
  the public or private sector. Past Franz Edelman
  winners have included General Motors, which used
  O.R. to save more than 2 billion through
  improved productivity at 30 assembly plants in 10
  countries, and a team from the city of New Haven
  and Yale who won for preventing AIDS through an
  innovative needle exchange program
• Ranging widely in industry and geographic origin,
  the 2006 Franz Edelman finalists are Animal
  Health Institute and Cox Associates The US
  Commercial Aviation Partnership, comprising
  Airports Council International - North America,
  Air Transport Association, Department of Homeland
  Security, Department of Transportation, The
  Boeing Company, and the Transportation Security
  Administration Omya Hustadmarmor and M0re
  Research/ Molde University College Travelocity
  and Sabre Holdings and Warner Robins Air
  Logistics Center and the University of Tennessee.
  Descriptions follow
• The US Commercial Aviation Partnership
  Industry-government coalition ensures a balance
  between security and aviation-system performance.
  
• Since 9/11, there has been an outpouring of
  support for measures aimed to increase the
  security of the air transport system. However, in
  an era of limited resources and with airlines
  standing on the brink of bankruptcy, it is vital
  government decision-makers have the right
  information to help them implement measures that
  strike the right balance between truly enhanced
  security and the continued vitality of the air
  transport system.
• To meet this goal, a consortium comprising
  government, airlines and industry formed the US
  Commercial Aviation Partnership (USCAP). USCAP
  used Operations Research to create a unique model
  and analytical process that combines system
  dynamics with econometrics to provide a 30-year
  evaluation of the impacts of proposed security
  measures on each key stakeholder

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USCAP Franz Edelman Competition Example
Endorsement

• I am pleased that the USCAP Econometric Tool has
  been selected to be a finalist in the 2006 Franz
  Edelman Award.
• In 2004 I lead an independent review of the this
  tool so I am familiar with it's structure and
  general assumptions. The review was conducted at
  the request of Boeing and the TSA and indicates
  both the level of collaboration and also the
  approach to quality involved in the program.
• The USCAP Econometric Tool is an extremely broad
  tool developed to evaluate the operational and
  economic impacts of security measures considered
  in the wake of the September 11 events. This
  was and is an extremely important issue as there
  was no comprehensive approach to evaluate the
  overall cost of the many security measures
  proposed in this difficult time. Because of the
  sensitivity of the threat analysis the tool does
  not include a threat mitigation analysis
  component (eg the benefit in a classical cost
  benefit) but does an admirable job at evaluating
  cost and is an extremely useful tool at informing
  both policy and implementation decisions.
• The tool is unique in it's attempt to assess the
  breadth of the air transportation system and to
  evaluate both economic and operational effects.
  The tool includes a broad range of system models
  including those for airports, airlines, aircraft,
  air traffic control and others. These models
  include detailed sub processes including security
  screening and queuing, airport operations,
  aircraft operations etc. The tool is designed
  with an evolutionary structure which allows
  additional elements of the air transportation
  system to be incorporated as they become impacted
  by proposed measures.
• The tool has been used to evaluate a number of
  proposed security measures and has yielded
  unexpected insights. For example, in an
  evaluation of airport perimeter security and
  airport personnel identification policies, the
  frequency and number of transient personnel
  involved in airport construction and maintenance
  (which are significant) was not fully appreciated
  until the UACAP model was run.
• In summary I strongly support the USCAP
  Econometric Tool for the 2006 Franz Edelman
  Award.
• Sincerely,
• Prof. R. John Hansman
• Director, MIT International Center for Air
  Transportation
• Department of Aeronautics Astronautics
  Massachusetts Institute of Technology

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USCAP Analysis Example baseline
170 graphs and charts of key variables are
available
Average security times 10 minutes
Enplaned Passengers 688m (2004) 1,842m (2030)
Screening employees 45,000 (2004) 65,000 (2030)
Screening lanes 1,835 (2004) 2,527 (2030)

• Improvements over 2002 baseline
• 2005 staffing required per lane improved by 12.5
  
• Total (25 yr) screening throughput improvement is
  103

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USCAP Analysis Example new security
fee Elasticity Values for Air Travel

• General Observations
• When prices go up, people travel less
• When prices go down, people travel more
• The relationship is close to linear, for small
  changes as well as large
• Unfortunately for the airlines, they are not able
  to sneak in small price changes that go
  unnoticed (if they could, they would have done
  so)
• The USCAP System Model includes a conservative
  estimate for price elasticity (-.625)
• FAA used a value of -.7 for rate setting in the
  1970s
• More recent studies (attached) show significantly
  stronger values

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USCAP Analysis Example new security
fee Elasticity Values for Air Travel
Impact of Fare changes is quite apparent in
history not only when big changes take place,
but also in the accumulation of continuous
little changes Long term airline ticket
prices have been declining in real terms for 20
years. USCAP regression model accounts for 97
of long term history

Constant
Total Fare Pax Revenue Taxes, Fees,
Surcharges per Enplanement
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USCAP Analysis Example new security
fee Elasticity Values for Air Travel

• DOT Canada Independent ReviewAir Traveler
  Security Charge)
• Summary results of 18 superior studies
• Identifies 6 important categories of markets
• Significant variation across categories
• Long haul international business market least
  price sensitivity (-.265)
• Short haul leisure has highest price sensitivity
  (-1.52)
• Median value of all elasticities -1.15

USCAP uses - 0.625
Source Gillen et al.,. Air Travel Demand
Elasticities Concepts, Issues and Measurement,
Final Report, Prepared for Department of Finance
Canada, December 2002
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USCAP Analysis Example - New Security Fees 5
fee per one way ticket
D Security Charges Collected 900m/yr (2007)
1.8b/yr (2030)
D Enplaned Passengers - 3m/yr (2007) - 6m/yr
(2030)
D Aeronautical Revenue at the Airport -4m/yr
(2007) -60m/yr (2030)
D Airline Revenue -700m/yr (2007) -1.5 b/yr
(2030)
Note The model behavior in 2016 and beyond is an
accurate depiction of model behavior, as the two
scenarios experience a different set of dynamics,
stimulating different airline pricing behavior.
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RMAP Progress

• Initial analysis process/tool/analysis
• Analysis process/tool targeted for July, 2006
• Adversary and defender perspectives/uncertainties
  are important
• Identify total risk reduction and impacts of
  countermeasures
• Analyze implementation sequence impacts
• First real analysis targeted January, 2007
• From TSA A few thoughts on how RMAP can be used
   
•  
• Strategic risk analysis of entire aviation
  security system to identify key threats,
  vulnerabilities and consequences and the
  effectiveness and efficiency of potential future
  countermeasure suites as measured by reduction in
  total risk and the impacts on the commercial
  aviation system
• The TVC analysts embedded within the air cargo,
  airports, and airlines General Manager offices
  will be the primary users.  They will use the
  tool to conduct high-level cost benefit analysis
  of new programs, rules, or security measures. 
• Risk Management and Strategic Planning will
  facilitate those analyses.
• Spiral updates are anticipated

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RMAP Progress Adversary and defender
perspectives/uncertainties are important

Understand attractiveness/risks and uncertainties
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RMAP Progress Identify total risk reduction
and impacts of countermeasures
Total risk reduction
Various countermeasure suites
Implementation Impacts
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RMAP Progress Analyze implementation sequence
impacts
Total risk reduction
Implementing countermeasures in best value
sequence requires analysis of incremental risk
reduction
Implementation Impacts