[House Hearing, 113 Congress]
[From the U.S. Government Publishing 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/ 
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                       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.]
                                     

                                     

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