[House Hearing, 113 Congress]
[From the U.S. Government Printing Office]
THE ABU DHABI PRE-CLEARANCE FACILITY:
IMPLICATIONS FOR U.S. BUSINESSES AND
NATIONAL SECURITY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JULY 10, 2013
__________
Serial No. 113-43
__________
Printed for the use of the Committee on Foreign Affairs
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
or
http://www.gpo.gov/fdsys/
______
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
STEVE CHABOT, Ohio BRAD SHERMAN, California
JOE WILSON, South Carolina GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas ALBIO SIRES, New Jersey
TED POE, Texas GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina KAREN BASS, California
ADAM KINZINGER, Illinois WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas ALAN GRAYSON, Florida
PAUL COOK, California JUAN VARGAS, California
GEORGE HOLDING, North Carolina BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas JOSEPH P. KENNEDY III,
SCOTT PERRY, Pennsylvania Massachusetts
STEVE STOCKMAN, Texas AMI BERA, California
RON DeSANTIS, Florida ALAN S. LOWENTHAL, California
TREY RADEL, Florida GRACE MENG, New York
DOUG COLLINS, Georgia LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina TULSI GABBARD, Hawaii
TED S. YOHO, Florida JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
------
Subcommittee on Terrorism, Nonproliferation, and Trade
TED POE, Texas, Chairman
JOE WILSON, South Carolina BRAD SHERMAN, California
ADAM KINZINGER, Illinois ALAN S. LOWENTHAL, California
MO BROOKS, Alabama JOAQUIN CASTRO, Texas
TOM COTTON, Arkansas JUAN VARGAS, California
PAUL COOK, California BRADLEY S. SCHNEIDER, Illinois
SCOTT PERRY, Pennsylvania JOSEPH P. KENNEDY III,
TED S. YOHO, Florida Massachusetts
C O N T E N T S
----------
Page
WITNESSES
Mr. Kevin K. McAleenan, Acting Deputy Commissioner, U.S. Customs
and Border Protection, U.S. Department of Homeland Security.... 4
Mr. Nicholas E. Calio, president and chief executive officer,
Airlines for America........................................... 28
Captain Lee Moak, president, Air Line Pilots Association,
International.................................................. 34
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Mr. Kevin K. McAleenan: Prepared statement....................... 7
Mr. Nicholas E. Calio: Prepared statement........................ 30
Captain Lee Moak: Prepared statement............................. 36
APPENDIX
Hearing notice................................................... 52
Hearing minutes.................................................. 53
The Honorable Alan S. Lowenthal, a Representative in Congress
from the State of California: Prepared statement............... 54
Question submitted for the record to Mr. Kevin K. McAleenan by
the Honorable Ted Poe, a Representative in Congress from the
State of Texas, and chairman, Subcommittee on Terrorism,
Nonproliferation, and Trade.................................... 55
Questions submitted for the record to Mr. Kevin K. McAleenan by
the Honorable Joe Wilson, a Representative in Congress from the
State of South Carolina........................................ 56
THE ABU DHABI PRE-CLEARANCE FACILITY:
IMPLICATIONS FOR U.S. BUSINESSES AND
NATIONAL SECURITY
----------
WEDNESDAY, JULY 10, 2013
House of Representatives,
Subcommittee on Terrorism, Nonproliferation, and Trade,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 1:30 p.m., in
room 2172 Rayburn House Office Building, Hon. Ted Poe (chairman
of the subcommittee) presiding.
Mr. Poe. The subcommittee will come to order. Without
objection, all members may have 5 days to submit statements,
questions, extraneous materials for the record subject to the
length limitation in the rules.
In early April of this year, the Department of Homeland
Security struck an agreement with the UAE to set up a pre-
clearance facility in Abu Dhabi International Airport. DHS and
CBP both say that there are clear national security benefits to
a foreign pre-clearance facility. The logic seems to be simple.
Clearing travelers abroad before they reach U.S. soil reduces
the threat of terrorism costs to the United States taxpayers
for processing troublesome travelers. But if terrorists are
going to be smart enough to pull off a terrorist attack against
us, they will be smart enough to go to a nearby airport that
doesn't have a pre-clearance facility, like Dubai, so the
national security benefit seems to be unclear at the moment.
What seems to be clear is that a pre-clearance facility
comes across as hurting United States air carriers. Unlike
existing CBP pre-clearance facilities, no U.S. airline
currently serves Abu Dhabi. The only carrier that does is the
state-owned Etihad Airways. A customer from Asia has two
choices. That individual can fly with an American carrier, stop
in a European city like Frankfurt or Amsterdam, and arrive in a
major U.S. gateway city like Houston, where that individual can
expect to wait 3 hours or even longer to get through Customs.
Or the individual can fly with Etihad and stop in Abu Dhabi, go
through Customs in \1/2\ hour and then fly to any U.S. city.
Given the choice of 3 hours of waiting to get through Customs
with an American carrier or \1/2\ hour to go through Customs
somewhere else with Etihad Airways, international customers
certainly will make the choice to go with a foreign carrier.
United States' airlines have difficulty already competing
with airlines overseas because many of these airlines are
state-owned airlines, especially in the Middle East. Therefore,
the companies receive direct and indirect financial support
from their own governments. These are the same airlines that
the United States airlines have to compete with. Now the United
States Government wants to contribute to the competitive
advantage over U.S. air carriers. One airline tells me it gets
90 percent of its profits from international travel, in fact,
that is where it makes money. It then uses the profit margins
from international travel to offer lower prices on domestic
travel. Generally speaking, domestic travel is not profitable
for the American airline industry. So if the Abu Dhabi pre-
clearance facility moves forward, it is hard to see how this
doesn't lead to higher prices for domestic U.S. flights and
Americans losing their jobs.
CBP went to UAE, first asking for permission to put a pre-
clearance facility in an airport where U.S. carriers actually
go, Dubai. But UAE declined and instead suggested Abu Dhabi.
There are no U.S. carriers serving Abu Dhabi because it didn't
make economic sense. Dubai had the most traffic. There is now
no guarantee that even if U.S. carriers wanted to serve Abu
Dhabi, UAE would let it. There is a solution to the problem.
Move the pre-clearance facility to an airport in the Middle
East that the U.S. carriers already service, like Dubai.
So the two issues are economic issues and national security
issues that this committee will be addressing, and our
witnesses will be commenting on this afternoon. I will now turn
to the ranking member, Mr. Sherman from California, for 5
minutes for his opening statement.
Mr. Sherman. Thank you. Rare is it that a government
operation of this size arouses such controversy, but that is
understandable as the chairman points out. I think this is a
slight national security improvement. It just means three
planes a day are going to be subject to greater scrutiny. One
would say, well, then those who wish us harm might be subject
to scrutiny if they do something else. But if somebody is in
Abu Dhabi and chooses not to be on one of these pre-screened
planes, all they have to do is fly from Abu Dhabi to Lagos and
then proceed to the United States. They won't be pre-cleared in
Abu Dhabi, they won't be pre-cleared in Lagos, especially if
they do not declare their interest in coming to the United
States until they get to Lagos.
We need to promote tourism. The chairman and I are trying
to create a circumstance where Israel is a visa-waiver country.
Israelis travel easily to Europe, and if they can travel as
easily to the United States we will get those tourist dollars.
Another way to promote tourism would be to allow people to post
a bond. If the Customs officer says, well, for economic reasons
you may overstay, and you post a $25,000 or $50,000 bond, then
it is clear that you are not going to overstay for economic
reasons. The State Department resists this. It interferes with
the total carte blanche authority of their visa officers to say
you get in and you don't get in, and the visa process is one of
the greatest deterrents to tourism to the United States. And
when we have tourism to the United States we get all the
tourist dollars spent here, plus we get about half the airline
dollars of people visiting.
As to the Customs process, I sure hope it doesn't take 3
hours at Houston. One of the things I hope we hear testimony on
is whether, in fact, Abu Dhabi will have an advantage. Will it
be faster there than it is on average at JFK, Houston or
anywhere else a plane from the Middle East might land? Why
would we staff Abu Dhabi to the point where the waiting times
there, the convenience there, is greater than it is elsewhere?
There is a slight benefit to all tourism of this, and that
is, we get 25 officers for the price of five with Abu Dhabi
paying 80 percent of the cost. That means there will be
hundreds of people that don't have to go through the process at
JFK or elsewhere, and maybe that will make the line move
slightly quicker, and maybe that will enhance our efforts to
attract tourism. But I think the chairman is right to question,
why Abu Dhabi? Why not Frankfurt, why not Dubai, why not other
airports where American carriers are present?
We will want to also hear what restrictions there are and
fees would be imposed if an American flag carrier decided to
operate in Abu Dhabi, and whether they would really be given
access. But the fact is, perhaps if we save money because Abu
Dhabi is funding 80 percent of this operation, perhaps that
will allow Homeland Security to also provide the services in
Dubai whether or not we get a contribution from the Dubai
airport authority or other Dubai governmental entities.
It is understandable that an agency of the Federal
Government subject to sequester, subject to furloughs, and
subject to waiting times that deter economic activity and
tourism to the United States would say, well, gee, can't we get
another source of revenue? But if the net effect of this is to
diminish the number of people who fly on U.S. carriers and to
give an unfair advantage to the airline based in Abu Dhabi,
then what looks like a good deal for American taxpayers may, in
fact, not be. And I yield back to the chairman.
Mr. Poe. Thank you, Ranking Member. Members who wish to
make an opening statement have 1 minute. Mr. Cook from
California is recognized for 1 minute.
Mr. Cook. Thank you Mr. Chair. I will be very quick. I have
many of the same concerns about the cost to the American
taxpayers and why we are doing this. Cost benefit analysis, I
am not going to go over the same things that have been
mentioned by the chair and the ranking member, but right now I
just cannot get through my head why in God's name we are doing
this. So I yield back and want to hear what the panelists have
to say. Thank you.
Mr. Poe. Thank the gentleman. Mr. Perry from Pennsylvania,
recognized for 1 minute.
Mr. Perry. Thank you Mr. Chairman, and thank you for
bringing attention to this important issue today. I do have
strong concerns with the Department of Homeland Security and
its plan to establish a U.S. Customs and Border Protection pre-
clearance facility at Abu Dhabi International Airport in the
United Arab Emirates. This policy, in my opinion, will
negatively impact the U.S. economy and in particular the U.S.
airline industry. The establishment of this facility in Abu
Dhabi primarily benefits only a foreign emirate and its wholly-
owned national carrier, giving it a competitive advantage over
U.S. airlines, their employees, and their customers who pay
$1.5 billion in annual user fees. And I will wait to hear the
testimony and ask questions. And Mr. Chairman, I yield back.
Mr. Poe. Thank the gentleman. Mr. Yoho from Florida, 1
minute.
Mr. Yoho. I thank you, Mr. Chairman and Ranking Member, for
holding this hearing today. This hearing allows us to exercise
our proper oversight function over a decision to have a pre-
clearance facility in Abu Dhabi. My goal today is to find out
why Abu Dhabi was chosen, the criteria that went into the
decision and if there are better uses with our resources. With
close to $17 trillion in debt we must ensure that every tax
dollar we spend from the hardworking taxpayers of this country
on any endeavor is done strategically and efficiently. I am
curious if other sites in other countries may be a better place
to put our resources, and I look forward to hearing what our
witnesses have to say on that subject, and I look forward to
hearing you. Thank you. I yield back, Mr. Chairman.
Mr. Poe. I will introduce our first witness.
Kevin McAleenan began serving and acting as Deputy
Commissioner of the U.S. Customs and Border Protection on March
30th, 2013. Congratulations in your new role. Mr. McAleenan is
the chief operating official of the 60,000-employee border
agency. He previously served as the Deputy Assistant
Commissioner in the Office of Field Operations and Director of
the Office of Antiterrorism. Thank you for being here, and you
have 5 minutes. Thank you.
STATEMENT OF MR. KEVIN K. MCALEENAN, ACTING DEPUTY
COMMISSIONER, U.S. CUSTOMS AND BORDER PROTECTION, U.S.
DEPARTMENT OF HOMELAND SECURITY
Mr. McAleenan. Good afternoon.
Thank you, Mr. Chairman, Ranking Member Sherman,
distinguished members of the subcommittee. It is a privilege to
appear before you today to discuss U.S. Customs and Border
Protection's multi-layered strategy to secure America's borders
and facilitate legitimate travel.
As a unified border security agency for the United States,
CBP has the primary mission of preventing terrorists and
terrorists' weapons from entering the country. As a key
operational component of the Department of Homeland Security
and in response to the tactics adopted by international
terrorist organizations, a critical objective of CBP strategy
is to extend our zone of security, and in collaboration with
international partners interdict threats as far away from the
homeland as possible.
CBP pre-clearance operations accomplish this objective by
allowing for the same functions conducted at a U.S. port of
entry to occur on foreign soil prior to departure for the
United States. Indeed, Congress has directed DHS to expand the
use of this important security program by establishing
additional pre-clearance locations to prevent potential
terrorists and inadmissible persons from boarding aircraft
destined for the United States. Under the agreement with the
United Arab Emirates, the UAE, CBP officers to be posted in Abu
Dhabi will operate with a full array of legal authorities and
will be empowered to conduct inspections and searches of
individuals and baggage prior to boarding aircraft. In fact,
CBP officers in Abu Dhabi will have broader authorities than in
any other pre-clearance location. They will be in uniform and
they will have access to their full complement of law
enforcement tools.
Pre-clearance operations in Abu Dhabi will provide clear
benefits to U.S. security in a highly cost-effective manner. In
addition to enhancing security by allowing CBP to prevent high-
risk travelers from boarding the aircraft from Abu Dhabi to the
United States, it will strengthen law enforcement partnerships
and information sharing with the key international partner in
the region, and will improve facilitation of international
travel by reducing wait times and increasing capacity at
domestic gateway airports.
Abu Dhabi is a growing transit hub for global travel and
commerce in the Middle East. It is also a strategic transit
location for terrorist related travel, including watch listed
individuals in the terrorist screening database and passengers
whose travel history presents intelligence based risk factors.
The UAE receives direct flights from a number of areas with
active international terrorist operations and logistics,
constituting high-risk pathways for terrorist travel including
Yemen, Pakistan, Iraq, Iran, Lebanon, Bangladesh, Saudi Arabia,
India, and Africa including Egypt, Nigeria and Sudan.
In response to these terrorist travel threats, Abu Dhabi
pre-clearance will allow DHS to project a core security program
closer to source countries for extremist activity and to
identify and interdict threats to the United States early in
the travel cycle. CBP officers working in a pre-clearance
context will be able to interview, capture biometrics, and
examine luggage and electronic media of both known terrorists
and non-watch listed travelers that present intelligence based
risk factors.
CBP's planned pre-clearance operation in Abu Dhabi would be
extremely cost effective, representing a net increase in CBP's
capacity due to the willingness of the UAE to share the
financial burden. Under existing statutory authority, CBP is
able to receive reimbursement for services related to
immigration and agriculture activities. In total, CBP
anticipates receiving reimbursement for approximately 85
percent of the cost. At currently anticipated volumes, this
means that CBP would gain the equivalent of approximately 15
officers and additional processing capacity of up to 400,000
passengers. As a result, pre-clearance operations in Abu Dhabi
will also aid passenger processing at key international gateway
airports in the United States.
By the end of the year there will be four daily flights
from Abu Dhabi to U.S. airports. These flights arrive at
congested terminals at New York JFK, Chicago O'Hare and Dulles
International Airport and soon at LAX, during peak traffic
periods. Given the high percentage of non-U.S. citizens who
take longer to process on these flights, passenger traffic from
Abu Dhabi contributes to significant wait time challenges that
inconvenience all international travelers including those
arriving on U.S. carriers.
Pre-clearance at Abu Dhabi would relieve congestion in
these terminals and contribute to reduced peak period wait
times for travelers at these key U.S. airports, as well as
opening up additional processing capacity for international
flights and supporting the U.S. economy with increased travel
exports. Etihad Flight 151 is a good example. This flight is a
Boeing 777 arriving daily into O'Hare with an average of 380
passengers directly in the middle of O'Hare's peak traffic
period. Pre-clearance of this flight would remove almost 20
percent of the arriving travelers from processing queues at
that time, reducing wait times and opportunity costs for the
carriers and for the travelers arriving during this period.
Pre-clearance operations in Abu Dhabi offer CBP and DHS an
unprecedented opportunity to project America's border and
aviation security efforts into the Middle East while gaining
processing capacity and officer resources. This is a cost
effective opportunity to protect the American public and
international aviation that should not be missed.
Mr. Chairman, Ranking Member, and members of the
subcommittee, thank you for this opportunity to testify. I look
forward to answering your questions.
[The prepared statement of Mr. McAleenan follows:]
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Mr. Poe. Thank you for your testimony.
I will ask you some questions for 5 minutes, and we will
try to get in as much as we can before we hear that votes will
be relatively soon.
I see two factors involved in this whole situation. One is
national security, the other one is economic security. The pre-
clearance facility placed in an area where--first of all, I
will ask you why there instead of somewhere else, but also when
this decision was made was there any input and discussion about
the economic security of American airlines? American airlines
have to compete with foreign airlines that are subsidized by
foreign governments. They undercut U.S. carriers. U.S. carriers
make their money on foreign travel. They don't make money on
domestic travel.
And it appears on the surface that this will make it more
difficult for American airline companies to compete with
foreign subsidized companies who will fly directly to the
United States, so economic security, national security. The
airline industry as you know is very concerned about a pre-
clearance facility where they can't even fly into. Why this
location instead of somewhere else? And the second question is
the economic issue. Was that factored in, in this decision or
not? Go ahead.
Mr. McAleenan. Thank you. First on the security benefits
and why Abu Dhabi. Understand that, as the ranking member
noted, currently it is modest travel volume but this is a very
strategic location for us from a terrorist travel standpoint.
As I mentioned, for the countries that fly into Abu Dhabi, it
is a central travel hub for a number of places with active
international terrorist organizations. Yemen and the activity
of al-Qaeda in the Arabian Peninsula is of significant concern,
as we have seen with the Abdulmutallab attack on Christmas Day
in '09, the air cargo package plot, underwear attack II, and
their continued intent and interest in attacking commercial
aviation as stated through their publications and elsewhere. We
need to do our best to secure all of the travel routes from
that region.
So if you look at the strategy, we are trying to get to all
of those locations that are important terrorist travel hubs
with significant security programs. We have our targeting
capabilities which are global. They give us a lot of pre-
departure information and put us in a good position to address
risk and threats. But having an actual physical presence at the
foreign airport, talking to passengers prior to departure with
our Immigration Advisory Program, and better yet with pre-
clearance which is essentially the equivalent of a U.S. port of
entry, and in Abu Dhabi's context, they would give us our full
authorities and protections to operate there, is even better
than that.
So we are working to project enhanced security programs
through all of these strategic transit points for terrorist
travel. We have IP in five out of the top ten locations. We
have pre-clearance in one. This is another step in that broader
strategy. It is not the only thing we are trying to accomplish
or the only location. It is part of the overall strategy that
does include Dubai as you both noted. In terms of the economic
impact, absolutely we have had in-depth discussions, robust
exchanges of views with the air carriers and their
representatives, the pilots and their representatives, and we
appreciate their perspective and rely on their partnership in
many ways.
That said, the economic picture here is really a broader
discussion. We need to facilitate travel to the United States.
Each traveler coming, overseas traveler, spends over $4,000.
Every 33 travelers creates a U.S. job. We are struggling to
keep up with the pace of international aviation growth, 12
percent over the last 3 years, 4 percent expected over the next
five. Our staffing has been flat during that time. So we need
to come up with all potential ways to alleviate that congestion
in our international gateway airports.
We are transforming our arrivals process. We have submitted
a strategy to Congress that includes staffing increases in the
administration's '14 budget, and we are working on partnerships
like this in Abu Dhabi to try to address this from all angles.
Mr. Poe. Excuse me. Let me cut to the chase, or you cut to
the chase. Doesn't this put an economic disadvantage to
American airlines' companies that we have a facility where you
all are working, where American airlines cannot fly in and out?
We are helping a subsidized airline to fly their people to the
United States. Doesn't this put an economic disadvantage to
American airline companies who are already struggling? I mean
that is just the question.
Mr. McAleenan. I can definitively assert, Mr. Chairman,
that if American airlines were prevented from flying in and out
of Abu Dhabi we would not establish a pre-clearance location
there. We have negotiated guarantees in the pre-clearance
agreement that there will be access, equal access, non-
discriminatory for American carriers. They will be non-
discriminatory in terms of the charging of fees for gate
access, et cetera. Absolutely, there is not going to be a U.S.
operation where U.S. air carriers are prohibited from flying.
Mr. Poe. Well, my time is expired, but do we have that in
writing from them?
Mr. McAleenan. Yes.
Mr. Poe. That they will allow American airline companies to
fly in and out of that location?
Mr. McAleenan. It is in the pre-clearance agreement, and
the Abu Dhabi airport company has invited United and Delta.
They met in May toward the pre-clearance facility. They would
like them to establish service and are continuing to talk with
them. That tells us that they are sincere in their agreement.
Mr. Poe. Hear from the ranking member, Mr. Sherman from
California, 5 minutes.
Mr. Sherman. It may be that Congress should be providing
you with more resources to cut the wait times for all inbound
tourists. This would not only help us economically, because you
point out how important those tourist dollars are, but also
when we talk to people who visit the United States, the process
of getting here, whether it be getting the visa or going
through your operation, does not win friends and influence
people for the United States.
I would point out that the cost of this program is not just
the 15 percent we are paying. Your officers who live abroad
will be paying less in U.S. income taxes. They will be spending
their money abroad. So the savings may not be as much as you
have determined. I will be interested in looking at that
agreement.
It is not enough to say that the fees for gates would not
be discriminatory because Etihad is government subsidized. So
they could charge Etihad a huge flat fee and then give them
money back, and then they could charge the U.S. airlines. So we
want to make sure that those fees are reasonable as compared
with other airports.
You put forward the idea that this is going to enhance our
security. We don't want bad people with weapons on U.S.-bound
aircraft. The number one way to prevent that is people go
through security at the airport and we check to see if they
have weapons or bombs or explosives on them. A second approach
is we don't let somebody on if they don't have a visa, and
hopefully our visa officers say no to those who pose a national
security risk. They may be from a visa-waiver country, but we
hope that the citizens of those countries for the most part,
don't bear ill will toward us.
But let us say, God forbid, you have got somebody at the
airport at Abu Dhabi. They have got weapons somehow in a way,
or explosives, that aren't going to be detected. They have got
a visa. And so the question is, will the pre-clearance of the
planes that go directly to the United States stop them?
Assuming they know that there is pre-clearance, and assuming
that they would just as soon have as little scrutiny as
possible. So let us say this person is at the Abu Dhabi airport
with a visa. Couldn't they just buy a ticket to Frankfurt and
then buy a ticket from Frankfurt to JFK? And if they chose that
as their travel plan wouldn't they--or to Lagos, whatever, if
they think Frankfurt is too careful--wouldn't they be able to
avoid the pre-screening and get on a plane bound for the United
States? Obviously, if they go straight through our pre-
screening there at Abu Dhabi that gives you one more chance to
catch them. They will know that and they may be--so tell me,
what would stop the person that chooses to go to Frankfurt or
Lagos from Abu Dhabi?
Mr. McAleenan. Our responsibility, Congressman, as
antiterrorism and trade facilitation professionals is trying to
reduce the overall risk on air travel to the United States to
enhance our security, and this is a step forward in doing that.
Again it is a very strategic location. A top ten location for
terrorist related travel transiting through, and it is a step
forward in that process.
Mr. Sherman. But you don't have a direct answer. It is not
like this person, if they chose to go to Lagos or Frankfurt on
their way to the United States would be subjected to that pre-
clearance.
Mr. McAleenan. That was actually the part that I was
getting to. Anything that we can do that diverts and redirects
a terrorist operatives preferred travel route, makes it more
difficult for them, that reduces risk. That helps us become
more effective. And as I noted, we are trying to project
enhanced security programs to all of those areas that we think
are strategic for terrorist travel.
Mr. Sherman. I think the addition to U.S. security is very
slight. We are positing the idea that somebody is smart enough
to get a visa, and smart enough to have non-detectable weapons
or explosives, so an effort that at least reaches that level,
you would think, would just go from Abu Dhabi to a third
country, avoid the pre-clearance. So I think we have to
evaluate this on an econonic basis and I look forward to
hearing you answer the questions of my colleagues. Thank you.
Mr. Poe. Thank you. The chair recognizes Mr. Cook from
California for 5 minutes.
Mr. Cook. Thank you, Mr. Chair. Some of the data that I
have suggests that there is a relatively small number of people
that come through that airport. And of course it goes back to
this question of, if you are going to have a pre-clearance why
not do it at an airport where there is a large volume of people
coming in instead of an area that is stereotyped as a launch
point for terrorists? And I was thinking to myself, I always
try and put myself in the--my district, whether it is going to
pass the smell test.
The 8th congressional district is going to say, hey, did
you hear that Cook is supporting this pre-clearance facility in
Abu Dhabi? And they would say, Abu Dhabi? The average person on
the street is saying, since when has Abu Dhabi been a focal
point of all these flights coming in there? Wouldn't it be
smarter to do some of these other airlines or some of these
other airports throughout the country? So just the sheer number
as compared to other locations, can you address that question
please?
Mr. McAleenan. Absolutely, Congressman. In terms of why
wouldn't we be interested in doing pre-clearance at an airport
with a large volume, we absolutely are. We are in Toronto now,
and we are very open to doing it in locations in Europe and
Asia. The criteria that we are looking at to expand pre-
clearance is several fold. One, is there a security benefit?
Two, is there a passenger facilitation benefit? That is both in
numbers of passengers traveling through that airport, whether
there is a U.S. carrier presence, whether there is willingness
to grant U.S. law enforcement personnel our proper authorities,
and our proper protections in that country. And very
importantly, and that is what is present here given the
financial situation, is the potential for burden sharing and
partnership in reimbursement of our expenses.
So we are looking for opportunities that meet those
criteria, and it would be great to have it at a higher volume
location. That said, we are in strategic high volume locations
with our Immigration Advisory Program, today, at London
Heathrow, at Frankfurt, Charles de Gaulle, Tokyo Narita, in 11
locations around the world. So this is another opportunity for
us to increase our security prior to departure in a very cost
effective manner, and it is not exclusive of larger locations
or locations that your district might recognize as passing the
smell test as a larger hub.
Mr. Poe. The gentleman yields back his time. The chair
recognizes the gentleman from California, Mr. Lowenthal, for 5
minutes.
Mr. Lowenthal. Thank you, Mr. Chair, and I share some of
your concerns about why the impact upon U.S. carriers, and why
we are doing this, and some of the issues that were raised by
the ranking member and Mr. Cook also about why Abu Dhabi. The
question I have is that--and I apologize for coming late, and
so you may have answered this already.
In my background and study about this, it said that
approximately 80-85 percent of the costs will be paid for by, I
guess it is the UAE. What I am wondering is, exactly what will
they be paying for and not paying for? And is this a precedent
that we want to go throughout the world that when we set up
Customs and Border Protection pre-clearance we want that nation
to pay for it? And what relationship will they have to the
employees that are there, and who will they be accountable to?
And what does it mean when they are paying the freight? And is
this what we want to happen throughout the world, and are we
going to ask the Canadians and the Carribean and others to now
to pick up the cost also? Is this just in Abu Dhabi?
Mr. McAleenan. Thank you, Congressmean. In terms of the
reimbursement provisions, they are under existing statutory
authority both in Title 8 in the Immigration and Nationality
Act and in Title 7, the Agriculture title. Basically they allow
us to collect reimbursable services for those aspects of the
operation, Immigration and Agriculture. The Customs aspect of
our operation is prohibited under the cover statute in Title
19, so that is a separate issue. So it is for the Immigration
and Agriculture, the facility, the services, all of the things
that are necessary to support our Immigration and Agricultural
operations. That is what is reimbursable.
In terms of how it is reimbursable, there is not a direct
relationship between our officers that would be deployed and
the Abu Dhabi government. This is paid into user fee accounts,
very similar to how we receive funds from U.S. carriers, from
other foreign carriers, per passenger, and it goes into our
overall salary funds for CBP which is a combination of
appropriations and user fees. So these officers' jobs are not
dependent on Abu Dhabi. It is part of a broader CBP
appropriation structure.
Mr. Lowenthal. Is this a precedent that will occur with all
new pre-clearance facilities, and are we going to ask the
existing ones, you mentioned Toronto, to also pick up the same
share of costs?
Mr. McAleenan. Well, in terms of the precedent, right now
we are not in a position to expand pre-clearance without a
reimbursable agreement. We don't have the funding available to
do that. So in terms of the immediate future, if we were going
to be asked to look at other strategic locations we would have
to have a cost sharing aspect to that absent specific
directions or appropriations from Congress. In terms of asking
existing locations, that is probably not feasible. Those are
longstanding agreements since 1952 with Canada, for instance.
It does provide a value for both the country where the pre-
clearance airport facility is as well as for our security and
facilitation operation. So I don't think we are in a position
to go back to the existing partners.
Mr. Lowenthal. Again, I just want to say I still am not
convinced. I have concerns that I am willing to look at this,
but again I am most concerned about the impact upon the U.S.
carriers and also what precedent we are setting. Thank you, and
I yield back my time.
Mr. Poe. The gentleman yields back. We are in the process
of voting on the House floor. There are six votes. We will
reconvene immediately after the sixth vote. We do have time for
one more member to ask questions. Mr. Perry from Pennsylvania
for 5 minutes. To the other members of the subcommittee, we
will start back immediately after votes.
Mr. Perry. Thank you, Mr. Chairman. Mr. McAleenan, when
negotiating the reimbursement agreement with Abu Dhabi, did the
U.S. Government's representatives consider the competitive
effects on the U.S. airline industry? And can you tell me the
level of exploration of other alternatives, whether it would
have been like Kuwait or Dubai or something like that, and most
importantly someone without a competitive advantage gained from
a sovereign-owned foreign airline.
Mr. McAleenan. Absolutely, Congressman. Just on the second
part of that question first. Did we consider other locations?
Absolutely. Engagement with the United Arab Emirates, our
interest does not just extend to Abu Dhabi. We were very
interested in Dubai. That is also a very strategic location for
terrorist travel. It is a larger volume. U.S. carriers serve
that. There is a lot of attractive aspects to having a presence
there and we are very interested in continuing to pursue that.
In terms of the overall regional effort, DHS and CBP
engaged many governments in this region in response to the
emerging aviation security threat from al-Qaeda in the Arabian
Peninsula over the last several years. There has been ongoing
conversations. We have an Immigration Advisory Program now in
Doha Qatar as a result of that engagement. We have spoken with
the government in Kuwait and others as well on these critical
issues. So this is not a solely focused, limited, special focus
here.
In terms of negotiating and considering the competitive
facts, I would say absolutely because that is why we negotiated
the key provisions that provide U.S. carriers access on a non-
discriminatory basis and non-discriminatory fees. That was a
concern of ours that we wanted to emphasize to make sure they
had access. We also considered, as I mentioned in the earlier
questioning, the broader economic benefits of increasing our
capacity for international travel that we do have important
relationships with the UAE in terms of a $20 billion trade
surplus, 1,000 U.S. companies in the Abu Dhabi, 45,000 U.S.
citizen jobs affected there, a great defense relationship.
There are many aspects of the economic piece that are not
just focused on the concerns expressed by the U.S. carriers
that I am cognizant of and concerned about.
Mr. Perry. Okay. And I just want to make sure, and I
appreciate that. I am trying to keep an open mind about this
thing. But when we talk about the economics, as the chairman
has already stated it is not just the economics for the Federal
Government but the economics for American citizens via their
employers and the folks that travel in and out and how they get
there.
Another question is, I have a question regarding, you
talked about the additional security benefit, and I am just
trying to figure out what it is. If I am a terrorist and I know
you have a pre-clearance facility here and you are kind of
using it to vet passengers and make sure that you take a close
look at ones that might be bad actors and that we wouldn't want
to come to the United States, what would stop me from just
going somewhere else? I mean if you are advertising it that
way, if I am a terrorist and I have got any brains at all
wouldn't I just go somewhere else?
Mr. McAleenan. Again, that is the key concept of risk
management. We want to constrain their options. We want to shut
down different routes and this is a very strategic point from
regions of concern. A lot of these flights from source
countries for extremist activity are coming through the Arabian
Peninsula. They are coming through the UAE and Abu Dhabi. We
would like to close off one of those outlets with our strongest
security program that we can project abroad. But we are still
engaged in trying to address all of the other locations as
well, so it is not an either/or. It is part of a broader
approach. As you noted, the security benefits are significant.
We get to question the individuals. We get to take biometrics.
We have access to our screening systems, examine their luggage.
All the sorts of things that prior to departure that we can't
do in other places.
Mr. Perry. Prior to departure, I mean this is still done
with each passenger at some point along the trail, right?
Mr. McAleenan. Correct.
Mr. Perry. And so it is going to be done. The question is
do you do it prior to, because it would be the United States
doing it in a pre-clearance manner as opposed to the host
nation, is that what we are talking about here?
Mr. McAleenan. Absolutely. And if you look at the last four
or five major terrorist attack attempts on aviation, it has not
been on flights domestically within the U.S. as in 9/11, due to
TSA's efforts, due to our efforts at the border. It has been,
the liquid explosives plot was from the U.K. to the U.S.,
Abdulmutallab was flying from foreign to the U.S., the
Underwear Bomber II was going to be the same scenario, as well
as the air cargo plot. So we really think we need to project
our security to prior to departure area for both passengers and
cargo.
Mr. Perry. So one last question then. If I am an American
carrier, don't I want the maximum security on my aircraft not
only for the safety of the passengers but for the safety of the
aircraft itself? Are the American carriers, they are advocating
for this on a security standpoint or not?
Mr. McAleenan. I think the American carriers are very open
to us implementing these types of security arrangements and
they would prefer it at airports that they are flying from, no
question. That said, by securing overall global aviation it
does help protect the American aviation industry as well. An
attack on a foreign carrier flying to the U.S. would also have
a devastating impact, as we have seen with each shock of a
successful attack or attempt, on commercial aviation.
Mr. Perry. Thank you, Mr. Chairman. I yield back.
Mr. Poe. I thank the gentleman. It is my understanding that
none of the other committee members have questions of you,
Commissioner. I would ask that you furnish us a copy of the
agreement that you mentioned in your testimony, and you are
excused. We will start with the second panel immediately after
the votes are concluded, which should be about 30 minutes.
[Recess.]
Mr. Poe. The committee will come to order.
Nicholas Calio is the president and chief executive officer
of Airlines for America, the trade association for the
country's leading airlines whose members and affiliates
transport more than 90 percent of all U.S. airline passenger
and cargo traffic. Prior to joining A4A in January 2011, Mr.
Calio was Citgroup's executive vice president for Global
Government Affairs after he served President George W. Bush as
assistant to the president for Legislative Affairs from January
2001 and 2003.
Captain Lee Moak is the ninth president of the Air Line
Pilots Association, International. Prior to becoming a B767
Delta airlines captain, Captain Moak served 9 years in the
United States Marine Corps as a fighter pilot.
Mr. Calio, we will start with your testimony. You have 5
minutes.
STATEMENT OF MR. NICHOLAS E. CALIO, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, AIRLINES FOR AMERICA
Mr. Calio. Thank you, Mr. Chairman.
Chairman Poe, Ranking Member Sherman, we appreciate the
opportunity to testify today on behalf of Airlines For America.
We also sinceraly appreciate this committee taking an interest
in this issue. We will make clear that the administration's
agreement with the United Arab Emirates to place a U.S. Customs
and Border Protection pre-clearance facility in Abu Dhabi is a
bad deal for the United States, its economy, its airlines and
their passengers, in other words, your constituents.
The long term implications of this agreement and the
administration's apparent future plans for other pre-clearance
facilities are dramatic and will result in a dimunition of
services to cities across the United States including many of
your communities. What we have here, basically, is the United
States Government picking winners and losers in the
international aviation business. And the winners are the
international competitors of U.S. based airlines.
This is really a tale of two competing airlines, and is a
matter that CBP is claiming national security. It is also a
matter of economic security, and they play into each other. On
the one hand you have the U.S. airline industry which is at an
inflection point. Our passenger carriers managed to make a
collective profit across the industry 3 years in a row now.
Last year that amounted to 37 cents per enplaned passenger.
That follows the post-9/11 decade in which we lost over $55
billion and 160,000 of our employees.
In our reality we operate in a business environment that is
hostile at worst and neglectful to what is happening at best.
U.S. airlines and our passengers are subjected to a crushing
burden of Federal taxes and fees, myriad regulations that have
nothing to do with safety, horribly outdated infrastructure,
and very stiff foreign competition, which is why A4A and in
some fashion as well, ALPA, is advocating for changes on all of
these fronts under the framework of a national airline or
aviation policy.
As both of you gentleman noted earlier, the international
routes that we fly, that U.S. airlines fly, are the most
profitable part of our business and subsidize many of our
domestic routes. If you impinge on those international routes
you impinge on domestic routes eventually. Our success on these
international routes is dependent upon our ability to compete
with non-U.S. airlines and the ability of CBP to process
passengers and cargo coming into the country. Their ability to
accomplish this basic task has been in crisis for years.
Processing times for entering the U.S. average 1 hour and
sometimes 3 hours and more. And we would encourage committee
members to try out JFK or Miami or Dallas or some of the other
ports of entry to get a firsthand look at what is actually
going on at our borders.
That is the U.S. reality. Our foreign competition's reality
is much better. A number of these airlines, like Etihad, are
state-owned and state-supported, and are viewed by their
government as strategic assets to be used to expand their
economies, diversify their economies, and grow jobs. For the
UAE this is not a national security issue. It is a commercial
play. It is about diverting traffic that otherwise would fly on
American metal to their own planes for which they don't have
the population to fill.
The Middle Eastern carriers currently have 399 wide-body
jets on order. That doesn't count what is already in their
fleet. That is more than twice what all U.S. carriers combined
have. Their populations do not support that kind of traffic or
that kind of capacity. In addition, these governments and their
airlines have made clear, publicly, repeatedly, that their goal
is to make airports like Abu Dhabi the world hub. They have
further made clear that an integral part of the plan, in fact,
the indispensable part of the plan is to do this by skimming
international passengers from U.S. carriers.
So what we have here, basically, is the United States
Government facilitating the business strategy of these foreign
governments and their airlines. If they are successful it will
be much easier to fly into this country if you fly through Abu
Dhabi than it is if you fly directly to JFK, Houston, Miami,
Chicago, Dulles, or other points of entry. This accommodation,
as noted by Etihad's CEO, will encourage travelers to book
their travel through Abu Dhabi to avoid the lines at U.S.
airports that can't be processed in timely fashion by Customs
and Border Protection. You all know that this agreement
contravenes the direction of this Congress in the 2013
consolidated appropriations bill.
Try to conclude very briefly. No matter how you dress it
up, it is inappropriate and harmful to the interest of U.S.
industry and its passengers to take this action. CBP working in
partnership with airlines has already pushed out our borders
electronically. Together we take extraordinary measures to vet
passengers before they get near the airport, let alone when
they are in the airport. There is no indication that there is
any shortcoming in these measures. Their own testimony, if you
look at it, is a testament to the measures that are taken
currently today. And this agreement won't be tax-free. We
shouldn't be spending any money whatsoever outside of the
United States. What we have consistently said is that you need
to fix the problem here first before you fix it, try to do
something overseas.
And I would be happy to take any questions and hope to
address some of the points that Deputy Commissioner McAleenan
made in his testimony. Thank you very much.
[The prepared statement of Mr. Calio follows:]
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Mr. Poe. Thank you, sir.
Captain Moak?
STATEMENT OF CAPTAIN LEE MOAK, PRESIDENT, AIR LINE PILOTS
ASSOCIATION, INTERNATIONAL
Mr. Moak. Mr. Chairman, Ranking Member Sherman, it is an
honor to be here today to represent the more than 50,000 pilot
members who fly for 33 U.S. and Canadian airlines.
As you know, government policy and regulations can make or
break an industry, and this is why ALPA is focused on the harm
that a U.S. Customs and Border Protection pre-clearance
facility in Abu Dhabi will inflict on the U.S. airline industry
and its tens and thousands of employees. Make no mistake, the
U.S. airline industry and its workers are driven to compete and
prevail against our foreign competitors.
But our industry cannot prevail or even keep pace while
hindered by our own Government's actions that make it harder
for us to compete. Unless Congress intervenes now, U.S.
taxpayers will assist one of U.S. airlines' strongest foreign
competitors in the form of a CBP pre-clearance facility. In the
Wall Street Journal, the chief executive officer of Etihad, the
state-owned, national airline of the UAE, based in Abu Dhabi,
recently said of our CBP facility, and I want to quote, ``would
support Etihad's expansion as an international carrier and
boost Abu Dhabi, the largest and richest of the seven emirates
in the UAE, as a global aviation hub.''
Before I get into why we oppose the site, let us look at
the big picture for U.S. airlines. The U.S. airline industry is
the most heavily taxed of all U.S. industries, and passenger
protection regulations place another financial burden on our
airlines. At the same time, the U.S. airline industry is
competing with foreign airlines that are often state-owned or
heavily state-sponsored and do business with huge advantages
such as a tax-free local environment and a beneficial
regulatory policy. In addition, those foreign airlines have
virtually unlimited access to the U.S. markets through Open
Skies agreements.
The explosive expansion of these state-sponsored airlinese
threatens U.S. airlines particularly on international routes as
you noted earlier. In addition to benefiting from pro-aviation
growth policies at home, these carriers can buy new American
manufactured airplanes at below market financing rates
subsidized by U.S. taxpayers. They then use these airplanes to
compete against U.S. carriers on international routes. Here is
just one illustration of the threat. The value of the aircraft
currently on order by Emirate's state-owned, state-sponsored
airline is $84 billion. An amount that exceeds the market value
of the entire U.S. airline industry.
While ALPA supports enhancing the airline customer
experience through CBP pre-clearance facilities, among other
solutions, our union backs doing so only where the use of U.S.
resources benefit our economy and our workers. Abu Dhabi does
not pass the test. CBP facilities allow U.S. bound passengers
to clear U.S. Customs while in a foreign location, permitting
them to go directly to their domestic flight or final
destination once they land, a convenience that is a powerful
marketing advantage.
ALPA supports the 15 current U.S. CBP sites which are
located at foreign airports where U.S. airlines provide a
considerable amount of the air service. At least one U.S.
airline served each of these airports before there ever was a
CBP facility there. The pre-clearance site planned at Abu Dhabi
presents a stark contrast because no U.S. carrier currently
flies between Abu Dhabi and the United States. So only Etihad,
state-sponsored, state-owned airline, would benefit. Passengers
from Asia or Europe could opt to fly Etihad and connect through
Abu Dhabi instead of booking on U.S. airlines because they
would avoid long customer lines at U.S. airports. As a result,
demand for seats would decline on certain routes and force
airlines to reduce or eliminate service. This scenario would
cost U.S. jobs and threaten the U.S. aviation industry, which
as you know contributes to 5 percent of the GDP.
I will end quickly here if you don't mind. Long custom
lines at U.S. airports are already hurting our airlines. ALPA
commends the House for its action to prohibit the funding of
the Abu Dhabi facility, and we supported the Meehan Amendment
to the House Homeland Security appropriation bill that
prohibits funding using taxpayer dollars. While ALPA currently
supports DHS efforts to identify national security threats,
opportunities exist to enhance this security without giving an
unfair advantage to foreign airlines.
ALPA calls for and Congress should force DHS to abandon
plans to open this pre-clearance facility. Congress should pass
strong legislation to prevent DHS from using U.S. taxpayer
money to provide an advantage to non-U.S. airlines. The United
States should appropriately staff our domestic customs and
immigration operations to reduce these passenger wait times at
all our international airports, and the United States should
adopt a transportation policy that advances the U.S. airline
industry in the same way that these foreign governments' state-
sponsored, foreign-owned companies have been doing.
The U.S. airlines and their employees are determined to
compete. We are not begging for subsidies. We are determined to
compete in the international marketplace. But we need a level
playing field. So putting a permanent halt to this Abu Dhabi
facility is a critical step in that direction. Thank you.
[The prepared statement of Mr. Moak follows:]
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Mr. Poe. Thank you both, and thank you once again for
waiting until the votes took place.
One thing that is striking is that the United States
airline industry has to compete with, really, foreign
governments who also have an airline and they subsidize that
airline. And there are various countries that do that, not just
in the airline industry but in the airline manufacturing
business whether it is Airbus versus Boeing. We have been told
that this is really not as big of a concern as we are trying to
make it out to be. That those folks in Abu Dhabi said that
American airlines can fly in there. They just don't. Any
comments on that?
Mr. Calio. Yes. Thank you, Mr. Chairman. We don't because
it is not commercially viable. There is less than 1,000
passengers a day that go through that airport. We have
investments already made in other hubs--Frankfurt, Amsterdam,
Paris--where we have planes go through now and our passengers
traverse. There is a reason for that. We have been there
historically. We have made huge investments there, and we have
to make huge investments to get slots engaged in Abu Dhabi.
Mr. Poe. Captain Moak?
Mr. Moak. I would like to go back to a statement that you
made just a minute before that. You are right. It is one thing
to have to compete, and we are not winning in this industry as
Americans, but it is one thing to compete with foreign airlines
subsidized by their governments. But it is an entirely
different matter that not only do we compete with that but we
have to compete with our own Government subsidizing those
foreign airlines. We shouldn't have to compete with that. We
shouldn't have to compete with our Government subsidizing this
pre-clearance facility or subsidizing other things that give
them a competitive advantage.
Mr. Poe. Has there been an analysis made as to how this
will financially affect the airline industry in the United
States both money-wise and job-wise? Has there been an
analysis, give us an investment? The effect. What is going to
happen?
Mr. Calio. We are working on one. Experience suggests,
however, that there will be an impact and it will be a
relatively severe impact over time if their business strategy
works. There are a lot of people who believe that the business
strategy is working already because we are not competing with a
commercial enterprise and we are commercial enterprises. In the
last 10 years U.S. airlines have lost 24 percent of their
market. I may have referenced that before. That trend is
continuing, the international market that is. And as you noted
earlier, Judge Poe, it is those profits that we use to
subsidize our domestic routes. So it is something that we are
monitoring very carefully, but if they are successful in their
marketing effort to take business that normally would come from
India, and they have already bought a 24 percent stake in Jet,
out of India, which will make it a major hub for Indian
traffic, then it is India, China, Asia that are the growing
ridership that we are concerned about.
Mr. Poe. Did you want to weigh in? I know you want to weigh
in on it, Captain Moak.
Mr. Moak. Yes, sir, just quickly. The previous guest that
you had who testified at the panel, perhaps the Homeland
Security said they did an economic study. They took that into
consideration. Possibly we could ask them to share it, and
perhaps we would see that there is not much to that study, and
maybe they need to focus back on security and not the
economics. Now we are happy we have a financial and economic
analysis department that is well regarded, and like Mr. Calio
said, our experience has been that this has a negative impact
on our airlines and it will have a negative impact on our jobs.
But we are happy to model that and get that to your committee.
Mr. Poe. Committee would appreciate the financial and
security analysis, both of those if you have them done. As far
as you know, was the airline industry consulted before this
pre-clearance facility decision was made?
Mr. Calio. It depends on how expansive your view of consult
was.
Mr. Poe. I don't mean they asked a flight attendant that is
in an airplane as it is flying somewhere. I don't mean that as
asking the airline. But was the airline industry consulted to
your knowledge about this decision?
Mr. Calio. No. We were told in 2011, late 2011 that they
wanted to place this facility in Abu Dhabi. We and ALPA and
others objected to the placement of that facility. We continue
to do so. There wasn't very much transparency here, and then
just before the announcement was made they came to visit us to
tell us that they were going to make the announcement that they
were close to an agreement. At that meeting in my office, DHS
and CBP personnel including Mr. McAleenan indicated to us that
actually the facility, construction of the facility was
virtually complete, which means for that entire period of time
they were going forward as if the agreement was a done deal.
I would be candid to say that we feel like we did a lot of
talking. We feel like we were talked to but not listened to.
And as part of that, at the end of Mr. McAleenan's testimony,
Deputy Commissioner McAleenan's testimony, he said that we, the
airlines, were open as far as he knew to facilities in other
places. We have consistently said from the beginning both
orally and in writing, that we are not open to facilities being
opened outside of the United States until we fix the problem at
our borders which is costing us hundreds of millions of jobs
and billions of dollars a year according to a study by the U.S.
Travel Association.
Mr. Poe. Are you talking about the time limit, the time
wait getting into the United States?
Mr. Calio. Yes, sir. It is driving travelers away.
Mr. Poe. One last question and then I will turn it over to
the ranking member. One of you alluded to the percentage of
business American airline companies do internationally compared
to foreign airlines. So how much of the international business
is done by American carriers and what did it used to be? Give
me something that we can understand.
Mr. Calio. Can we get back to you on that because I don't
have the figures off the top of my head.
Mr. Poe. Captain Moak, do you have any idea?
Mr. Moak. In general. In general, major full-service,
international connect carriers do 50 percent of the flying
internationally. There was a time we did much more than that
because for the same reasons the Chicago Convention was held in
this country, same reasons they speak English when they fly,
the U.S. was the leader in the airline industry. That has
continued to decay over the decades due in large part by
government policy. And that is why we are here, because
everything matters. And this pre-clearance facility matters
because it gives an advantage to a foreign government.
Mr. Poe. The chair recognizes the ranking member, Mr.
Sherman.
Mr. Sherman. Thank you. Captain Moak, you said you support
the 15 facilities we have now because they are all served by
U.S. carriers. Mr. Calio said he opposes anymore. Are you in
support of new facilities if they meet the standards of the
existing 15 facilities or do you just draw the line at the 15?
Mr. Moak. No. Let me be real clear here because--and I
think we are in line on this. The 15 facilities that are in
place along the Canadian border, Bermuda, and Ireland because
of our rich heritage there, and down in the Carribean were all
there to facilitate Americans traveling to and from those
countries. Now if you look at what they are proposing in the
Middle East, it is not for Americans and it is definitely not
for Emirates because there is not that many Emirates. It is
really a competitive thing.
Mr. Sherman. Well, what I am asking you is would you
support something in Frankfurt? Would you support something in
London?
Mr. Moak. I would like to be able to have a discussion on
any of those issues as long as we are staffing our facilities
in the U.S. appropriately first.
Mr. Sherman. Okay. That brings up kind of the next issue,
and that is, if this country cared about its economy, cared
about our trade deficit, we would be doing everything possible
to get foreign tourists. Your two organizations would be
supporting our Israel Visa Waiver bill and we look foward to
getting that support from you. We would be staffing Customs and
Border Protection adequately so that is was a convenient place
to visit, and we would do that either with user fees on the
tourist or we would do it with taxpayer money. Instead, other
countries are spending a fortune trying to get us to visit
their countries, and between the visa process and the border
protection process it is hard to say we are really welcoming
foreign tourists. And I hope that you folks will be back
talking about adequate funding so that we are not talking about
the 3 hours that the chairman mentioned.
The only reason that Abu Dhabi views this as an advantage
is because we have ridiculous waiting times at our airports. If
it was smooth at JFK who would care that it was also smooth at
Abu Dhabi? I sympathize with you having to compete against
subsidized airlines and hope that we have some way to either
subsidize those who must compete with the subsidized or tax
those that are--but it is certainly an unfair trade practice
for Abu Dhabi to subsidize its airline especially if that can
be documented.
You put forward the idea that Abu Dhabi would be a world
hub. I think that is pretty impossible. That is to say, I don't
think anybody is going to fly from Germany to Abu Dhabi so they
can get on a plane and fly back over Germany in order to reach
the East Coast of the United States. But it can very well be a
regional hub for the Middle East and Central and South Asia on
flights to the United States. The administration----
Mr. Moak. Sir, could I comment on that?
Mr. Sherman. Yes.
Mr. Moak. Yes, sir. All you have to do is look about 80
kilometers up the road at Dubai and what you have there is
exactly what you are saying that wouldn't happen in Abu Dhabi.
The Dubai airport is exactly that, a world hub. It is having
an----
Mr. Sherman. Does anybody fly from Paris to Dubai for the
purpose of then getting on a plane and flying over Europe and
reaching the United States?
Mr. Moak. No, but if you reverse the traffic flow and think
about it in this way, there are hardly any human beings that
live in that part of the Emirates----
Mr. Sherman. Right. So is it really a hub for the billions
of people who live in South Asia, Central Asia and the eastern
Middle East?
Mr. Moak. That is exactly----
Mr. Sherman. It would not be a hub for South Americans, the
Europeans, et cetera.
Mr. Moak. But what my point was, 1 billion people in India,
instead of flying on U.S. carriers via Frankfurt, via Paris or
what not----
Mr. Sherman. I think we are just arguing about the
difference between regional and world hub. To me a regional hub
serves the region of South-Central Asia and eastern Middle
East. If you want to call that a world hub you can do so when
you are speaking. The argument is though that if we can get
more officers paid for by Abu Dhabi that would mean faster
processing times at JFK and elsewhere. Will that lead to more
tourists coming to the United States because the waiting time
at JFK will be 5 minutes less because everybody arriving on
Etihad Airlines will have been pre-cleared? Are we focusing
just on the Middle East traffic and ignoring the opportunity to
enhance the visitor experience for Europeans?
Mr. Calio. You are not ignoring it. The notion that this is
going to alleviate traffic into JFK simply is incredible. Last
year Abu Dhabi was the 80th on the list of passengers----
Mr. Sherman. I am not talking about a minute or two. If you
take 2 percent of the traffic off the 405 freeway it moves much
better. The question here is, does this diminish waiting times
by a minute or two at JFK, O'Hare or elsewhere?
Mr. Calio. I don't think it does. Because last year you had
573 passengers on average a day, half of whom were U.S.
citizens coming into the United States from Abu Dhabi. JFK has
35,000 people go in. O'Hare has 15,000, Dulles 10,000.
Mr. Sherman. I mean you are saying on the one hand this is
going to be enormously big, on the other hand it is going to be
quite small in its impact. What do we do to get more CBP
officers so that we are not arguing here about--most of our
discussion here is how do we make sure that every single person
visiting the United States has a 3-hour delay and some don't
get through with a \1/2\-hour delay by flying Etihad Airlines.
What do we do to get a \1/2\-hour delay at most for everybody?
Captain Moak?
Mr. Moak. Yes, sir. I did want to point out that we support
you on the visa issues. In fact, we have been leading on those
issues and I hope we get invited back to help you on that
because we believe in that. That enhances the economics of the
U.S. and the airline industry. One point that gets missed a
little bit about a pre-clearance facility, which really goes to
your question, this facility allows them to fly from there,
they are talking about current flights but it allows them to
fly from that position, that point, to anyplace in the United
States, direct, whether there is a customs facility at that
place or not.
Mr. Sherman. Do you really think Etihad is going to fly
into Van Nuys? I mean for the most part these major carriers
are going to fly into major U.S. cities. I mean I don't think
you are going to have direct non-stop service.
Mr. Moak. If you had to make money that would be a great
case to make, but currently that is not. They have a long view
of their aviation. And their long term view is to make it so
foreign carriers can't compete with them.
Mr. Sherman. So they would fly in not only to the 30 or 40
biggest airports in the United States, but then having direct
service to all the top 40 cities where we have CBP offices they
would say, let us fly to Wichita too? Non-stop flights from Abu
Dhabi to Wichita filled with passengers who want to go to
Wichita and don't want to go to JFK?
Mr. Moak. One example would be when a foreign carrier flies
into JFK and there is a weather divert and they have to divert
up to, for example, Hartford, which has been a discussion
before.
Mr. Sherman. Right.
Mr. Moak. Hartford doesn't have the facilities there that
are staffed. If you were pre-cleared already by Etihad you
wouldn't have any of those problems. Although in irregular
operation one-off it is a significant competitive advantage to
not have to go through our facilities.
Mr. Sherman. Well, I mean I don't think anybody is going to
buy a ticket on Etihad to JFK because they say, god, if I get
diverted to Hartford it is going to be a smoother experience.
They are planning to land at JFK and they are trying to avoid--
--
Mr. Moak. The point is, by definition they are avoiding the
facilities in JFK or anyplace they go.
Mr. Sherman. People who buy this ticket are buying it so
that they can get a \1/2\-hour delay in Abu Dhabi instead of up
to a 2- or 3-hour delay at a U.S. airport. They are going to be
flying into a major U.S. city. Nobody buys a ticket, say, god,
I hope I get diverted to Hartford.
Mr. Moak. No, but it was a point I was trying to
illustrate.
Mr. Sherman. Folks leaving Abu Dhabi are trying to go to
major U.S. cities where we give them much too long of a delay.
If we had 30-minute average delays at all our major airports,
Abu Dhabi wouldn't be spending this money and you wouldn't be
protesting it because it would be smooth for everybody arriving
here.
Mr. Moak. And you could make the same point that the
Emirates have 122 Boeing 777s, the largest fleet in the world,
and they have 90 A380s, the largest fleet in the world, and if
they had financial transparency, had to compete as a normal
airline we wouldn't be having this conversation either.
Mr. Sherman. The big problem is the subsidy. We are here
talking about saving an hour or two of hassle for three planes
a day which is a tiny part of the giant problem, which is major
subsidies particularly in the Gulf and major delays at U.S.
airports, which are not only bad for your industry but bad for
the much bigger piece of the pie which is the tourist dollars
that are spent once they are here. You are the tip of the
iceberg. We need those tourists here. We need them spending
money. And we discourage them in so many ways. And these delays
are just--speaking of delay I have delayed the chairman by way
too many minutes by going over time. I yield back.
Mr. Calio. Could I possibly just make one point in
reference to how you would get more officers?
Mr. Sherman. No, you can't.
Mr. Poe. Yes, you can, Mr. Calio.
Mr. Calio. I didn't mean to cause an argument between you.
Airlines passengers coming into this country pay fairly high
fees to get here. Not all those fees go for Border Patrol
agents at airports. They go to other border locations. And if
this committee were to do an analysis, and we would be happy to
do it for you, and looked at land borders, rail, cars, people
walking across the border, there is no fee whatsoever for most
of them. So they don't contribute to the system but they are
taking up the bulk of the personnel, the bulk of the CBP
assets. And a slight change in that could create a better
situation at the airports right off the bat.
Mr. Poe. That is a good point. We will let you do that
analysis. Do you have a follow-up question?
Mr. Sherman. You are saying your analysis will show that
not only are tax dollars fully funding those land entry points
because there is no user fee, but that the user fee paid by air
transportation pays not only in full for all these CBP assets
at airports, but also contributes to the Tijuana crossing?
Mr. Calio. No, it does not cover the entire cost.
Mr. Sherman. Okay. So it is not like the air passengers are
paying more than 100 percent of the air transportation costs
and are subsidizing the land----
Mr. Calio. They are paying a certain amount of their costs,
some of which is then used to subsidize the other points of
entry, or the non-air points of entry.
Mr. Sherman. So you are saying they are not fully paying
the costs of air points of entry but they are subsidizing the
land points?
Mr. Calio. Yes, sir.
Mr. Sherman. I look forward to reading your study.
Mr. Poe. Well, I am terribly confused on that issue. The
fees charged at airports that are used for CBP, are some of
those fees then not used at airports but used at other places
like rail and the Tijuana crossing as the ranking member
mentioned?
Mr. Calio. Yes, they are placing personnel there at a
disproportionate--it is a misallocation of resources. All of
what the airline passengers pay should be used for personnel to
cover air points of entry. That simple.
Mr. Poe. All right. I want to thank you. Do you have
another question?
Mr. Sherman. I would request that our subcommittee ask CBP
to give us an analysis. How much do they collect at airports--
--
Mr. Poe. Excellent.
Mr. Sherman [continuing]. And how much do they spend at
airports.
Mr. Poe. We will take your analysis and we will get one
from the CBP as well. Thank you for volunteering to do that.
Appreciate both of you being here and thanks again for waiting
until the vote break. Thanks for your testimony.
[Whereupon, at 3:48 p.m., the subcommittee was adjourned.]
A P P E N D I X
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