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For Immediate Release!
ACTE Testifies To Congress: CAPPS II Is Not Acceptable To Corporate America...
- Direct Costs To Industry Estimated at Highly Conservative $2 billion...
- Residual Charges Undoubtedly Much Higher!
Alexandria, (Mar. 16) -- In testimony sent to the U.S. House of Representatives' Transportation and Infrastructure Committee/Subcommittee on Aviation, the Association of Corporate Travel Executives emphatically stated that CAPPS II is not acceptable to corporate America in its current form. ACTE's Executive Director Nancy Holtzman categorically listed a number of areas in which the controversial program could cost the industry $2 billion (a highly conservative estimate that gives CAPPS II the benefit of the doubt). Yet residual costs -- like lost business opportunities -- could drive the total price many times higher.
While the greatest opposition to CAPPS II has come from the privacy sector, ACTE's task force has been working to illustrate that the program's numbers are high for the industry, risk a fragile industry recovery, and have repercusions that go far beyond the price of development. Holtzman's stance reflected the efforts of the task force, recent membership surveys, and collective conclusions submitted by members.
Holtzman insisted that a complete industry cost impact analysis -- along with a working resolution model (to rectify false-positive readings) -- be completed before CAPPS II could be considered ready for preliminary testing. She also asked Congress to remove the stressful onus on carriers to provide the government with PNR data for premature testing. Holtzman recommended Congress require the TSA to set up industry focus groups to illustrate the areas in which CAPPS II falls dramatically short -- like in violating corporate privacy policies.
Below, ACTE's written testimony was submitted to the committee on March 15, 2004.
U.S. House of Representatives
Transportation and Infrastructure Committee
Subcommittee on Aviation
Re: Hearings on The Status Of The Computer-Assisted Passenger Prescreening System (CAPPS II)
March 15, 2004
Chairman Mica and members of this distinguished Committee;
I appreciate this opportunity to present the views of the Association of Corporate Travel Executives regarding the potentially deleterious impact of CAPPS II on the business travel industry. As you are aware, the economic contribution of business travel, and its role in both the national and global recovery is very significant.
The Association of Corporate Travel Executives represents the safety, security, and service interests of a million business travelers, and the financial concerns of more than 900 major corporations in all 50 states and 37 countries across the globe -- as well as the welfare of the traveling public in general. Our U.S. membership is comprised of a major cross section of industrial America, including defense contractors, the energy industry, the banking community, heavy manufacturers, major educational institutions, communications firms, prominent pharmaceutical houses, and light manufacturers.
ACTE members companies have hundreds of thousands of travelers in the air on any given day. We represent billions of dollars in travel-generated taxes and many times that in direct expenditures, which support the heart of American commerce. Even by a conservative estimate, this trickle down affect of ACTE members on the overall American economic infrastructure cannot be measured in dollars alone, but in jobs, corporate growth potential, company reinvestment, and ultimately -- share value. The business traveler is a critical part of the nation's -- and the world's -- economic future. And the successful, seamless flow of business travel is critical to the American business profile.
The Association of Corporate Travel Executives fully understands the necessity of protecting air travel as a strategic U.S. asset. We support any realistic effort to make air travel safe and as invulnerable to terrorist attack as humanly possible. We recognize the challenges and efforts of the Transportation Safety Administration to devise an automated screening system that is racially impartial, automatic in its operation, and impervious to tampering. Yet we believe the premature and unrealistic implementation of the current Computer Assisted Passenger Prescreening System (CAPPS II) may end up costing the business travel industry billions of dollars by failing to address fines, ticket penalties, trip cancellations, and manpower hours lost without even the basic consideration of a passenger resolution process.
Mr. Chairman, the focus of the media and other organizations regarding CAPPS II has been primarily on the question of personal privacy and the perceived loss of individual freedoms. You will hear enough on this emotionally charged subject throughout these hearings. Likewise, distinguished experts on personal freedoms can easily make the case that CAPPS II can be extended into every aspect of American life from the purchase of train tickets to real estate (in an attempt to establish baseline residency).
Our case is far more direct. The impact of CAPPS II on the business travel industry needs no hypothetical extrapolation. Through analysis and study, our association has determined that as it stands, CAPPS II treats delays, the potential for trip cancellation, and the resulting charges (flights missed, meetings canceled, and the cost of unused surface and air transportation) as incidental -- something that will be eventually addressed in some manner, after the program is implemented.
This approach is unacceptable to Corporate America, who will undoubtedly bear the brunt and expense of the charges, and ultimately the cost of lost business and productivity.
How high will these charges be? Our estimation of the figure is based upon the number of travelers the TSA -- or other authorities -- claims will be either delayed for further interrogation or denied boarding. Using conservative estimates of one to 2 percent of the overall travel figure of 400 million, this presents the industry with between 4 and 8 million passengers that will be detained or denied boarding. Assuming that one to two million of these will be business travelers, resulting costs generated by ticket penalties, missed meetings and canceled support arrangements might run as high as $2 billion.
But the cost to industry will go far beyond the charges associated with travel. In a study quoted by Daniel Goldman in his book "Working with emotional Intelligence, it is estimated that salesmen for Fortune 500 firms generate an average of $3 million per year in sales. That's over $11,500 per day and over $1,400 per hour. How can corporate America reclaim the value of those lost hours and the opportunity-cost of lost business?
Minimizing the impact on business will require a resolution process that works as fast as getting passenger tagged with false-positive readingsback on the plane as quickly as they were removed. It will require a resolution process that is designed by TSA with input and involvement from major travel industry stakeholders, such as ACTE, rather than designed in a vacuum and proved unworkable when implemented. The potential costs are much too high to risk failure.
Furthermore, ACTE's CAPPS II task force has determined that the basic operating principle of this program is in direct conflict with privacypolicies of most major American corporations. Complying with CAPPS II may expose these corporations to liability and litigation stemming from compromised passenger record numbers (PNR data) or stolen identities resulting from unauthorized access to records. The combination of additional travel charges, lost corporate revenue, and the threat of corporate litigation may force companies to invest more heavily in alternatives to business travel.
We respectfully recommend the following steps be taken:
It is the opinion of our membership that CAPPS II -- nor any program like CAPPS II -- should not be submitted for consideration until all of these provisions are provided for in a detailed plan.
- The CAPPS II program should not be submitted for consideration -- let alone implementation -- until it contains a cost impact analysis detailing charges to the carriers, the GDS systems and to companies (in manpower hours, fines, and penalties due to delays and lost opportunities).
- All pressure should be taken off the airlines to supply the federal government with PNR's until an exact process -- that complies with security requirements, corporate privacy policies, and resolution issues -- is developed.
- Every effort should be made to involve the major stakeholders in the CAPPS II development process. The TSA should expand its briefings with business travel industry leaders to include focus groups to help devise mechanisms like a speedy resolution process, ways to work with GDS companies, and gauging the impact on corporate privacy policies, before announcing proposed testing dates for CAPPS II. Fully detailed fines schedules and current procedures should be published for the traveling public immediately.
- Full funding for CAPPS II should not be granted until DHS and TSA satisfactorily resolve the seven CAPPS II issues identified by Congress as key areas of interest and determined by the GAO as yet to be addressed.
In conclusion, the Association of Corporate Travel Executives would like to thank Chairman Mica and this committee for responding so quickly to an issue that will have long-term implications for corporate America, the traveling public, and the national economy. The resources of our association are at the disposal of this committee and the TSA.
Thank you.
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