Why were US airlines able to stop checking IDs at the gate less than a year after 9/11, while European and Asian airlines still to this day check identity documents. Has this resulted in a lower level of flight security in the US? Do US airlines know something the Europeans don't, or do they just have more lobbying power with their government. This blog post analyzes the economic reasons behind the US airlines decision to stop checking IDs, and exposes the fact that US Passenger Name Record (PNR) data is for the most part, unreliable and worthless.
This blog post is a more formal writeup of part of my talk at the IDMAN 07 workshop in Rotterdam yesterday, which goes hand-in-hand with my soon to be published research paper: Insecure Flight: Broken Boarding Passes and Ineffective Terrorist Watch Lists.
The airlines have designed a complex system of price discrimination for their tickets. This sounds worse than it really is though. Simply put, the airlines try and charge each passenger as much as that passenger will be willing to pay. Students get special discounts, those who plan their trips a few months in advance get cheaper prices, while business travelers purchasing tickets the day before their flight pay through the nose. This is by no means a strategy solely used by the airlines - five cent coffee for the elderly at McDonald's, AAA discounts at hotels, and early bird breakfast specials are all a form of price discrimination.
For price discrimination to be effective, the airlines need to restrict the ability of passengers to resell tickets. Otherwise, passengers would resell unwanted tickets on eBay. This system is primarily enforced by requiring passengers to show ID when they check-in. The airlines will not permit someone to fly using a ticket purchased in someone else's name.
Not every passenger has to check-in at an airline counter as print at home boarding passes allow passengers with just carry-on bags to skip the check-in counter at the airport and go straight to the security checkpoint. Luckily for the airlines, the Transportation Security Administration also checks passenger ID, and compares each passenger's identity documents to his or her boarding pass. If your ID and boarding pass do not match, TSA will not let you past their checkpoint.
TSA's ID checks are not enough to make sure that only the "right" people get on airplanes. Two passengers flying to different destinations (domestic or foreign) can swap boarding passes once they've successfully walked through the security checkpoint. A passenger can purchase a fully refundable ticket for a flight to San Francisco, go through security, and then travel to New York on a ticket purchased in someone else's name (after calling up the airline to cancel the first ticket, and get his money back, of course). Finally, passengers can simply refuse to show ID to TSA officials, get patted down at the checkpoint, and then board a flight using a ticket purchased in any name he wishes.
All of these techniques for evading the name/boarding pass checks are possible primarily because the airlines do not compare a passenger's ID to the name in their computer at the time the passenger boards the flight. This mandatory check was introduced shortly after 9/11, but less than one year later, the airlines had managed to petition the government allow them to stop the checks. The airlines companied that the additional ID checks were expensive and slow to do, and as a result, were causing flights to be late. Compare this to Europe and Asia where pre-boarding ID checks are mandatory in most countries. The European airlines still seem to turn a profit, and are no later than their American peers.
And now for the second economics lessons of the day:
In economics, an externality occurs when a the participants in an economic transaction do not shoulder all of the costs or reap all of the benefits of the transaction. For example, manufacturing that causes air pollution imposes costs on the general public and not just on the manufacturing companies that fill the air with soot.
Now lets apply this new term to the world of airplane tickets and ID. The airlines have designed a complex system of price discrimination for the sale of their tickets in which two passengers sitting next to each other on a flight could have paid vastly different sums for the same ticket. The current system of ID checks is not actually sufficient to restrict the use of airplane tickets to those whose names are printed on them. Furthermore, the airlines in the US are not willing to shoulder the financial cost of enforcing the ID/boarding pass restrictions which would stop people from evading their discriminatory price controls.
An important question that must then be answered is: how is the price discrimination still working? If anyone can get on an airplane on a ticket in someone else's name, and there is such a large difference in the price of tickets between students and businessmen, why are more students not selling their plane tickets on ebay?
The answer to this question comes down to externalities. TSA performs an ID check at the security checkpoint. Anyone showing false ID to a TSA employee is breaking a federal law. Furthermore, attempts to travel with someone else's boarding pass are also potentially illegal - although the law here is a little bit more unclear. TSA's checks, and the threat of federal punishment are enough to stop the vast majority of would-be airline ticket ebayers from attempting to fly on someone else's ticket.
As I mentioned before, there are several methods of evading the ID/boarding pass checks. While these may be illegal, they are all more than likely to lead in a succesful flight for the passenger.
For the airlines, their decision to not check IDs at the gate is simple and logical: The additional staff labor required to check every passenger's ID at the gate would cost more than any revenue lost due to the small minority of passengers who are willing to face federal prosecution for attempting to travel using a ticket purchased in someone else's name. The threat of TSA action against a passenger who bought their ticket from ebay is enough to keep 99% of passengers "honest".
The airlines do not feel the financial need to check ID (and thus enforce their system of price discrimination) because TSA does it for them, albeit in a way that can be evaded by motivated passengers willing to risk legal action.
TSA has made a big deal about acquiring Passenger Name Records (PNRs), the databases of passengers on each flight, and the usefulness of the data in fighting terrorism. This information is especially valuable for passengers coming in from Europe and other parts of the world, as it means TSA or other government agencies can tell an airplane to turn around if we do not like the name of a passenger who is onboard.
The problem with PNR data, is that at least for any flights originating in the US, the data is completely useless. As I've discussed above, there are a handful of ways through which a passenger could get on a flight without the airline (and thus the government) knowing who they are. If the airlines can't be sure who is on their flight, then their passenger data is worthless. For the purposes of giving out frequent flier miles, it is sufficient, but if you want to use the data to search for bad guys, enforce a national dragnet, or create a creepy surveillance state, the data is no good.
How do we fix this?
Personally, I'd prefer to live in a world where records of our travel were not kept, and where people who no longer wished to go to Hawaii for spring break could resell their plane tickets on ebay. However, that is not likely to be the same world in which most of the Homeland Security establishment wish for us to live. As an exercise in system security design, lets at least try and "fix" things in such a way that the US government is able to get an accurate list of who is flying. Furthermore, lets be realitic, and recognize that the airlines have massive political power in Washington DC, and thus we cannot depend on Congress passing a law requiring the airlines to check passenger IDs at time of boarding.
I propose a slightly unconventional solution: TSA should no longer require that passengers have a valid boarding pass to get past the security checkpoint. Just as passengers can currently decline to show ID - and get subjected to a more stringent security search - passengers should equally be able to decline to show a boarding pass. Passengers refusing to show a boarding pass would simply be given the SSSS treatment (a pat down, a carry-on bag search, and perhaps a few questions). Flight security would in no way be put at risk, as TSA would be sure to verify that such passengers would not have any dangerous items on them.
TSA would also need to make it clear that it is not a federal offense to fly on someone else's ticket, and make a public commitment not to harass any passengers for attempting to do so. With such a change in TSA policy, the airlines would not longer be able to depend on TSA enforcing their discriminatory price controls for tickets. TSA's job would be scaled back to making sure that bombs, knives and other weapons are kept off airplanes, and the airlines would then have to shoulder the cost of matching passenger ID to reservations. If faced with the threat of thousands of resold and traded airplane tickets, it is quite likely that the airlines would quickly follow their European peers, and begin to perform checks before flight boarding.
The benefits of such an action, other than a sharp reduction in TSA workload (and thus staffing needs), would be a huge increase in the reliability of airline PNR database records. Simply put, the airlines would then be able to confirm with some accuracy the identities of each passenger on an airplane. For those of you who believe that the government knowing the identify and location of your fellow citizens will make you safer, then such an action by the airlines would result in a safer flying experience. How strange....
Caveat: Passengers using fake ID would still be able to evade the airline's checks, but using a fake ID is already illegal. People willing to do this cannot be stopped by TSA currently.