Privatization of Airport Screening Services - Example

NAME] [LECTURER’S NAME] [SUBJECT CODE AND TITLE] [DATE] Privatization of Airport Screening Services The last decade has witnessed tremendous developments in the air transport industry. With the number of passengers travelling by air increasing tremendously, so has been the increase in the number of luggage on transit. However during the same period, there has been an emergent of extreme terror activities. Of great concern has been airborne terrorism that that has the potential of causing enormous destruction and potential damage. Following the events of September 11, the global engagement on terrorism has taken a dramatic twist especially in the US that has become the target for terror attacks. Key to the initiatives of countering terrorism has been airport security screening that has replaced racial profiling. Enormous advancements in screening techniques have been developed over time and virtually everyone travelling by air has been subjected to security screening at the airport before boarding a flight. This phenomenon has elicited public outcry and opposition with particular reference to the use of full body screens and pat-down that are seen as an invasion of travelers’ privacy. This has resulted in part to calls from different quarters for the restriction of Transport Security Administration’s involvement in airport screening procedures. It is on this basis that this paper thus examines the benefits that can be reaped if the airport screening services are privatized. Before considering the benefits that can be achieved through the privatization of airport screening services, it is important to appreciate the role of government in the same. Security is an inalienable right for every citizen in a sovereign state and it is the sole responsibility of the government to ensure that this right has been achieved by every citizen regardless of their status in the society. Therefore, security issues are critical to the functioning of any government in order for it to dispense its responsibilities. The government has played this role through the Department of Homeland Security that has been mandated with securing the nation’s transportation system. In the same respect, the Transport Security Administration has been on the forefront in providing airport security screening to all passengers boarding a plane. This authority has employed the federal air marshals who are equipped with skills, knowledge and abilities to make aviation system safe and secure. It is important to appreciate the role that government plays in regulating businesses. The government plays a paramount role in business since it is a major employee, purchaser, subsidizer, competitor, financier and more importantly a business activity regulator. Government regulation has arisen because of the occurrence of some kind of market failure of the free-enterprise system.1 Therefore, the government must play a regulatory role failure to which loopholes may emerge in the market where players may have every incentive to value cleverness more than prudence and short-term gains over long-term investments. Such a business environment where regulations are void is prone to immense business malpractices such as unhealthy competition, distortion of prices and lack of accountability. The government intending to represent the public interest of its citizens, resorts to regulations to effect corrective measures to the free-enterprise failures.2 However, most of this regulations have been created primarily because of the efforts of special-interest groups that have successfully lobbied for their enactment.3 Government regulation is thus desirable when there is a need to regulate the existence of a natural monopoly. Although monopolies are capable of managing and catering for the entire market more efficiently and cheaply, they are likely to restrict output and raise prices.4 It is this potential abuse that justifies the need for government regulation to check on anticompetitive practices in monopolies. On the same trajectory, government regulation is necessary to deal with excessive competition.5 The basic idea behind this rationale is the fact that excessive competition has the potential of pushing prices at unprofitable low levels. Such levels may translate into forcing some enterprises out of business ultimately resulting into higher prices on the basis that the remaining enterprises will inflate their prices leaving the public at a worse off state than they were in before.6 In addition, government regulations are aimed at helping achieve certain social goals deemed to be of public interest.7 Some of these social goals may be related to negative externalities and the government may try to correct problems arising from them. For the case of airport security screening, the negative externalities may include terror attacks that may result in loss of life and property among other impacts on the economy and security. The government’s role in providing security then becomes essential as its moral responsibility to the citizens. In this circumstance, the government becomes more suited to offer security screening services as it already has the capacity and machinery in place given that security concerns are part of its governance responsibilities. Another equally important government goal is to keep people informed especially when dealing with issues that touch on their security. In the fight against terrorism, it is desirable that citizens are provided with adequate and timely information all the time as this information helps them make decisions on how to protect themselves. The government thus becomes the only entity that can use its regulatory powers to ensure that information of certain kind is relayed to the citizens.8 However, the government has failed miserably in fulfilling this requirement. When it comes to information on terrorism, the government has considered such information as classified and the only way that citizens get wind of it is maybe through media and online leaks. In addition, the Transport Security Administration has always failed to own up to the errors of its officials and techniques as it always finds a way to cover up is mistakes thus keeping the public in the dark. It is on such a basis that government regulation on enterprises becomes null and void. The greatest failure of the current federal and government airport screening is the fact that so far no single terrorist suspect has been nabbed. If the 25th December foiled bomb attack on the Northwest Airline is anything to go by, then we are in for a rude shock as this single incident cast a doubt on the effectiveness of our screening procedures. Terrorists have become more sophisticated technologically and focusing our attention on airborne terrorism while overlooking other potential risks will be detrimental. Terrorists can in fact launch a long-range missile and hit a plane airborne without necessarily having to board the plane. Moreover, people do not travel by air because they want to bomb airlines and not all travelers are potential terrorists. Nevertheless, it is ridiculous for TSA to play as the aviation security regulator while at the same time offering airport screening as this will obviously result into conflict of interest for the both responsibilities. This is just but an addition to the many shortcomings of government controlled enterprises. Government controlled enterprises are full of administrative and management burdens that correlates to poor economic and governance practices.9 Government regulations results into higher operational costs related to the number of regulating agencies that need to be created in order to enforce these regulations.10 The more the regulatory agencies are created the higher the government expenditure on managing their operations. On this premise, the government spends a lot of money maintaining the operational costs of these agencies instead of using the same on other important areas of the economy. This scenario has often resulted into deficits forcing the federal government to bail out non-performing agencies by increasing tax burden on the citizens as it tries to check the effects of inflation. In addition, there are other indirect costs that may arise from government regulations. Such costs may arise from the forms, reports and questionnaires that enterprises have to complete in compliance with the requirements of the regulating agencies.11 These costs that the enterprises have to incur are then passed on to the consumers in the form of higher prices. In essence, the more a government intervenes in the processes of the economy the more likely that that economy will be burdened with political distortions, bureaucracy, waste and corruption. It is a fact that governments always have vested interests in controlling enterprises one of them being political influence. This political influence has been cited to lead to excessive employment and inefficient operations.12 With regard to airport screening, the hand of the government is commonplace in the policies and techniques that govern the same. The government has ceased to be proactive in its policies and only responds to terror threats on impulse. For instance, it is only until the September 11 that the government introduced racial profiling and it is only until the foiled Christmas day bombing that the government thought of screening air passengers. Consequently, these measures are always influenced by the prejudices of law makers at capital hill who then codify these prejudices into law. Moreover, state owned enterprise are usually established with many different purposes in mind.13 The vagueness in public enterprises’ goals make it harder to design challenging jobs for public managers and even harder for them to perceive their own impact on the enterprise’s performance.14 Nevertheless, the lack of clear goals and performance in public enterprises makes it hard for managers to develop strong goals and action competencies. The basis for this is that performance evaluation focuses on the assessment of adherent to rules and on inputs and processes rather than on results.15 Therefore, managers in public enterprise spend their time in ensuring that regulations and rules have been followed leaving them with no time to innovate and make significant strategic planning that can enhance the efficiency and cost-effectiveness of the enterprise. As the higher-level administration has more difficulty in assessing performance, they obviously delegate less authority to lower level imposing more requirements for rule and adherence and for approvals and clearances.16 This then translates into a pattern of inevitable bureaucracy that makes these enterprises inefficient. Bureaucracy has the tendency of making government processes excruciatingly slow and firms have to endure long delays in transacting with the government. Such delays may include filing tax returns, obtaining certificates and even seeking approval from the government. Bureaucracies are also prone to malpractices such as corruption as many managers may be willing to cut deals with unscrupulous government agents to shorten the entire operation processes. Given the thus mentioned pitfalls of government owned enterprises, the move towards a free enterprise becomes favorable. Salinger has argued that a free enterprise guarantees individual, political, social and economic freedom.17 Free of government, the economy will grow even larger as the free enterprise seek to maximize their incomes by using their own personal property, physical or intellectual to give the market what it wants thereby gaining marketing share and profits.18 Free markets then becomes a way of improving the efficiency and cost-effectiveness of enterprises as it limits the scope for political interference in decision making. This limitation thus makes managers more responsible to the stakeholders who will monitors performance better than the government does. Therefore, the best way to privatize airport screening is two-fold. Firstly is giving airports the autonomy to plan, adopt and implement their own security screening programs. Secondly, airlines can also be allowed to adopt their own screening techniques for the passengers travelling with them. This can be well achieved if the two contract security firms that have been assessed and approved by the government to offer these screening services. The benefit of this is the fact that both airlines and airports will become more responsible for their own security meaning that they will be forced to incorporate and prioritize security concerns in their strategic plans. On this basis, security will become a tool for measuring and managing performance as customers will be keen when choosing the airlines to travel with based on their security policies. However, given the financial burdens of the government following the financial meltdown, private enterprise will be the only answer to innovation. Baumol has indeed pointed out that innovative activities are mandatory in the free market unlike in other markets where innovation is fortuitous and optional.19 If then the airlines and airports are allowed to independently carry on their own security screenings, then they will have the capacity to invest more in intelligence gathering and investigations using more innovative and sophisticated techniques. The basis for this will be to keep the terrorists from gaining access to the airlines in the first place. In addition, the spread of technology in the free market will be remarkably speeded up since time is money.20 This will be made possible since the bureaucracies synonymous with government systems will have been dismantled speeding up the adoption and implementation process. Inasmuch as innovation is prevalent in the free market, competition is the driving force behind all innovations and business advances.21 Ertuna has pointed out that competition is the driving force of free market and it is this competition that is the foundation of economic success and economic development.22 If airlines and airports manage their own security requirements, there will be the creation of a healthy competitive environment as they strive to outdo each other. In such an environment, the travelers will be treated as kings as the airlines and airports compete to give them the highest quality services at reduced costs. Furthermore, private security firms will also compete against each other in providing high quality services. This phenomenon will in turn push these players to innovate and invent new ways to offer better services in order for them to thrive in the free market. At this point in time, privatization of the airport security screening is a desire venture and it is incumbent for the government to start considering it. The reasoning behind this is that private providers of these screening services will be able to devote their expertise and resources to innovative activities that will eventually push out the inefficiencies of the current system. Nevertheless, privatization will create healthy competition which will allow the providers of the services become more innovative and sophisticated in order to cut an edge in the competitive environment. However, the government will still play an integral part in ensuring that all private security firms meet the required national and international standards in addition to dealing with homegrown terrorism. However, this involvement should be limited so that the activities of the security firms are not compromised by government interference. Notes 1 Ann Buchholtz and Caroll Archie, Business and Society: Ethics and stakeholder Management, 7th ed. (Mason: Cengage Learning, 2009) 466. 2 Buchholtz and Archie 466. 3 Buchholtz and Archie 466. 4 Buchholtz and Archie 466. 5 Buchholtz and Archie 469. 6 Buchholtz and Archie 469. 7 Buchholtz and Archie 468. 8 Buchholtz and Archie 468. 9 Scott H. Jacobs and Jacqueline G. Coolidge, Reducing Administrative Barriers to Investment: Lessons Learned (Washington DC: IBRD, 2006) 9. 10 Buchholtz and Archie 473. 11 Buchholtz and Archie 473. 12 Martin J. Ricketts, The Economics of Business Enterprises: An Introduction to Economic Organization and the Theory of the Firm (Northampton: Edward Elgar, 2002) 445. 13 Robert F. Durant, ed. The Oxford handbook of American Bureaucracy (Oxford: Oxford UP, 2010) 234. 13 Durant 234. 14 Durant 234. 15 Durant 234. 16 Durant 234. 17 Lawrence M. Salinger, Encyclopedia of White-Collar and Corporate Crime (Thousand Oaks: Sage, 2005) 340. 18 Salinger 340. 19 William J. Baumol, The Free Market Innovation Machine: Analyzing the growth Miracle of Capitalism (Princeton: Princeton UP, 2002) 1. 20 Baumol 1. 21 Ibrahim O. Ertuna, Wealth, Welfare and the Global Free Market: A Social Audit of Capitalism (Burlington: Ashgate, 2009) 56 22 Ertuna 56. Works Cited Baumol, J. William. The Free Market Innovation Machine: Analyzing the growth Miracle of Capitalism. Princeton, NJ: Princeton UP, 2002. Buchholtz, Ann and Archie Caroll. Business and Society: Ethics and stakeholder Management. 7th ed. Mason, OH: Cengage Learning, 2009. Durant, F. Robert, ed. The Oxford handbook of American Bureaucracy. Oxford, NY: Oxford UP, 2010. Ertuna, O. Ibrahim. Wealth, Welfare and the Global Free Market: A Social Audit of Capitalism. Burlington, VT: Ashgate, 2009. Jacobs, H. Scott and Coolidge G. Jacqueline. Reducing Administrative Barriers to Investment: Lessons Learned. Washington DC: IBRD, 2006. Ricketts, J. Martin. The Economics of Business Enterprises: An Introduction to Economic Organization and the Theory of the Firm. Northampton, MA: Edward Elgar, 2002. Salinger, M. Lawrence. Encyclopedia of White-Collar and Corporate Crime. Thousand Oaks, CA: Sage, 2005. Read More