A Question with Cargo

Kant: The most commonly used technology is x-ray based. The sales that we have been seeing the most of have been the larger tunnel size x-ray machines. So, it’s multiple view x-ray systems meant for inspecting pallet-size and skidded cargo.

AB: What’s been your experience in terms of the way airports and airlines have worked together on this issue?

Kant: It depends on the airport. At an airport like Houston Intercontinental, which is dominated by Continental, their lives are very much intertwined on how to respond to this. So, the Houston Airport System and Continental would typically work very closely together because, say, 90 percent of the cargo through that airport will be on Continental.

You take an airport like LAX or JFK or Miami, heavy cargo airports but not single carrier dominated, they need to make sure they can still have a strong growing cargo business at that airport for all the airlines. So, the airport may decide to do something centrally as opposed to relying on a single carrier. Where we see multiple carriers or lots of cargo on many different carriers, you see the lead being taken by the airport.

AB: What do you predict is going to happen come August 1?

Kant: I think there’s going to be a lot of questions, a lot of surprise shipments, a lot of things going by ground — and hopefully a little more clarity on what enforcement will look like. It’s not clear right now what will happen if things aren’t scanned.

AB: Do you foresee TSA grounding flights?

Kant: It’s certainly possible. It could translate into a fairly substantial change in aviation cargo revenue, and since the airlines seem to be just starting to be getting their feet back under them again, taking a hit on something as profitable as air cargo would be substantial.

AB: At this point, do you have any particular recommendations for the industry?

Kant: My recommendation to airports and to airlines is: It is real; it isn’t going away. They really need to talk with their security director and their cargo business managers and the industry. We’re not backordered yet; but the factory is almost full. We’re not the only provider; Smith’s Detection is another; L-3; we’re all very much focused on this.

There’s been a lot of talk about whether or not TSA is going to pay for these machines. There is no indication that’s going to happen in the current government budget environment. There’s no way it’s going to happen. So, for those airports or airlines who continue to wait to see if that’s going to happen, the ship has already sailed.

AB: Along the way, have there been any particular hic-ups or unforeseen hurdles?

Kant: The largest hurdle was that TSA in the initial stages and mid stages was having a difficult time determining how to communicate to the cargo, airline, and airport industry what would be allowable and what wasn’t. For example, there’s an approved list of technologies, but it’s classified. So, we would visit an airport and they’d ask for the TSA list. I would say ‘no’.

That’s one example. The list was called the Draft List of Pre-Approved Technologies. So the question from airlines and airports was, ‘If I buy this, will I know it’s still approved on August 1?’ I couldn’t answer the question. They were trying to make some investment decisions on some pretty costly hardware and then training people on it, and had no assurance come August 1 it would still be allowed.

TSA has since addressed that and has had better communication and did say these things would be allowed and grandfathered. But it caused an 18- to 24-month delay in the procurement cycle for some because they just didn’t have the assurance.

I would say that was an unforeseen bump.

AB: Did that procurement delay force companies like yours to scramble?

Kant: We’re certainly going to have to scramble. There’s just not much on the shelf anymore; we are building quickly. I think it could leave a number of shippers and airports and airlines with not enough capacity.