FOR OFFICIAL USE ONLY

MEMORANDUM-FOTTTHE RECORD

Event: Carol Hallett, former Executive Director for the Air Transport Association

Type of event: Interview

Date: October 22, 2003, 9:00 a.m.

Special Access Issues: None

Prepared by: JohnRaidt

Team Number: 7

Location: GSA Commission Office

Participants - Non-Commission: Carol Hallett

Participants - Commission: John Raidt, Bill Johnstone, and Sam Brinkley

Background

s. Hallett served as Executive Director and President of the Air Transport Association
from April 4, 1995 until 2002. Hallett served as the Administrator of the U.S. Customs
Service from the late 1980's until January 1993. She worked in the private sector before
taking a job with the Air Transport Association (ATA).

Air Transport Association (ATA)

When Hallett started with ATA, she met with the CEO's of the member air carriers to
help formulate an agenda. The CEO's were frustrated that ATA was two different
organizations under one roof, and they felt that they weren't being kept apprised of what
was going on. Operations and Safety were on one side of the house and lobbying, the
environment and security were on the other side of the house. The two sides weren't
talking. (Security had previously been under the auspices of Operations.)

( \ Hallett stressed that ATA is much more than a lobbying organization. In fact during her
^— tenure that organization had only five lobbyist positions. ATA supports the industry on
many issues including safety, security, environmental issues, engineering and operations.
She stated that the association never took any action unless there was complete
agreement among the ATA members.

\j \t dealt mainly with the CEOs who chaired the ATA Board wh
Allen of Delta, then Jerry Greenwald of United and then Fred Smith of FedEx (1994-96).

FOR OFFICIAL USE ONLY

 FOR OFFICIAL USE ONLY

Priorities
*>v
[ ij ^ Hallett stated that prior to 9-11 her focus was on environmental issues being addressed by
^~ ^ the International Civil Aviation Organization (ICAO) with respect to aircraft noise and
pollution emissions such as carbon dioxide, and on customer service issues including a
12-point passenger bill of rights. Her main goal on the environmental side was to assure
that all carriers had to abide by the same rules so that there would be no competitive
disadvantage for American carriers bearing greater regulatory burdens than foreign
airlines.

United Airlines' CEO Greenwald was the head of the Board at that time. Hallett
mentioned that the industry was engaged in a huge battle between 1994-1996 over the
issue of how best to finance the Airport Improvement Program and other costs. The
conflict was about user fees versus a ticket tax. This dispute caused great hostility
between carriers. Hallett focused on trying to reduce the animosity among her members
and unite the industry. She told them if they did not work together, Congress would
impose the worst of both worlds (a user fee and a ticket tax), which Hallett mentioned
was exactly what was imposed.

Hallett said she wanted to put together a 5-year plan. American Airlines' CEO Crandall
told her that ATA shouldn't even have a one-year plan because the organization's entire
purpose was to deal with issues as they popped up.

Hallett stated that one of her biggest initiatives was in the aftermath of the Valujet crash
and TWA 800 to create an Aviation Safety Alliance made up of various elements of the
aviation industry including ATA, engineering, manufacturing etc. to help get out in front
of issues by educating the news media about safety. She said that this was important
because there was so much misinformation washing around.

I After Valujet, ATA immediately went to work on hazardous materials issues. She
stressed that in the area of hazmat and other safety/security issues, perfection is
impossible. She tried to develop a self-policing capability.

Problems for the industry

Hallett said that in her estimation tKe industry was forced to spend a lot of money by
government regulations that were wasteful. She was unable to identify an example, but
said there were many. Hallett emphasized that all too often when an issue cropped up the
federal government wanted to throw money at it and this created inefficiencies. She said
it was far better to spend $1 billion to save 100 lives than to spend $1 billion and save a
single life, but the system did not have that kind of prioritization.

Safety vs. Security

FOR OFFICIAL USE ONLY

 FOR OFFICIAL USE ONLY

C \MHallett stressed that safety and security were always two different things and opined that
they always would be.

( \ When it came to safety issues such as hazmat rules stemming from the Valujet disaster,
\j /the effort wasn't focused on how to avoid regulation but how to solve the problem.
"Safety First" was part of their every day mantra. They were focused on "how could we
make it safer to fly."

/ ( A After TWA 800 in 1996, Hallett created a distinct Security Department and appointed a
V_ /Director of Security, placing the office under the auspices of the general counsel along
with environmental. Safety remained under operations.

A y\Hallett stated that ATA had a security council comprised of the security directors who
V^ met quarterly.
j> )
She stated that the airlines came up with machine-readable passports to help identify bad
\ ^ people trying to get on aircraft. United volunteered to test the program after Pan Am 103
It was the first step in getting a handle on who was flying. \
C \r\fi* vj^ \ ** jf^* \.S-'

Gore Commission / ^- V*A\ v*^

Hallett stated that ATA prepared an eleven-point plan for the Gore Commission,
including enhanced use of K-9 bomb sniffing units and an increased air marshal program.
""*"X.

( i I )ATA also raised the issue of the federal government taking over the security aspects of
V_j /aviation, including the screening function, which ATA had been calling for since 1973.

Hallett said that she lobbied for the creation of an aviation desk at the FBI to improve
intelligence about terrorism. Hallett believes not following through with this was the
single biggest mistake bearing on aviation security.

Profiling

Hallett said that she also advocated for passenger profiling. She had used profiling at
Customs and it was an important and non-intrusive tool.

Veil of Mystery

Another problem that Hallett saw was that too much information was public. Everyone
was "blabbing" to the media about every aspect of our security system, so that the enemy
knew everything we did to protect America.

Passenger Bag Match

FOR OFFICIAL USE ONLY

 FOR OFFICIAL USE ONLY

allett said that it was an impossibility to do 100% passenger bag match domestically
because of the number of passengers, bags and the lead-time required.

They focused bag match on international flights only because that's where the perceived
hreat was and because it was easier to do when people were required to get to the airport
so much earlier.

CAPPS

Hallett said that the purpose of CAPPS was to find who might intend to do something bad
to the United States, whether through bombing or hijacking.

Hallett was asked why CAPPS selectees were subject only to explosives screening of
their check baggage, if the goal of CAPPS was to identify hijackers as well as bombers.
She was not sure why, and acknowledged that this was questionable when screening
detection rates were abysmally low and there were an entire range of dangerous items
that were utterly undetectable by the screening equipment in use at the time.

Hallett said politics has a lot to do with these things. As an example she relayed a story of
how ATA was pushing for a regulation to identify a single child safety seat that could be
used on aircraft (as well as in cars). Hallett said that one of the safety seat manufacturers
was upset because they were losing out, and ATA was told to drop the initiative, and
nothing was ever done.

Hallett wasn't aware of when and how CAPPS was directed solely at checked baggage,
but she stated categorically that ATA did not push to reduce the effectiveness of CAPPs.
However during the interview she was shown a copy of an ATA document to the FAA
stressing that the only additional screening that CAPPS selectees should undergo should
be an explosives screening of their checked bags. They didn't want intrusive checkpoint
screening to deter people from flying.

She stated that we hadn't had any hijackings in a long time and that the magnetometers
and x-ray equipment at checkpoints that processed all passengers, whether or not they
were selectees, seemed to be doing the job.

allett stated that her only recollection was that the civil libertarians were winning the
game in fashioning a CAPPS systems. ATA was not part of the process for establishing
the weights and factors associated with the CAPPS algorithm. Hallett recommended that
the commission talk with Susan Rork at ATA who is expert on this issue.

mer Service

Hallett said that the pressure from the Hill to improve customer service was enormous.
ATA was told to stop "hassling" passengers. The Hill and DoT badgered the industry to
speed up the process, and ATA looked for ways to get people through faster.

FOR OFFICIAL USE ONLY

 FOR OFFICIAL USE ONLY

She pointed to the fact that the airlines were being rated by on-time arrivals, which added
pressure to the effort to process people with great speed. Hallett said that the fact of the
matter was we had a "lousy" air traffic control system operating the equivalent of a two-
lane highway when what we should have had is a 9-10 lane highway, but everyone
enjoyed bashing the airlines.

Checkpoint Screening

Hallett stated that ATA had pushed for a screening company certification program at
FAA for sometime, but that FAA had "ignored us" on the issue.

Hallett believes that money and training had little to do with the problems of poor
screening. She said the primary issue was "boredom."

f \ >vShe believes that pay, training and retention rates could have all been factors covered by
v_ ahe certification process.

Assuring that all carriers were abiding by the same screening requirements was essential
so that the playing field was level, and no one (including non-ATA members) would have
a competitive advantage because of less stringent screening requirements or practices.

Hallett was asked whether the carriers were conducting their own red team assessments
of their screener contractors. She thought not but that efforts were made by the carriers
to see how screeners could do a "better" job.

Hallett recommended that the commission talk with Dick Dibrouva and Susan Rork
(ATA security directors) regarding air carrier assessment of screening operations.

Industry relationship with the Associate Administrator for Civil Aviation Security

Hallett stated that the industry had a mixed relationship with Irish Flynn, but that he was
respected and decisive. She labeled Gen. Mike Canavan, who succeeded Irish Flynn as
head of Civil Aviation Security, "a disaster" and a "miserable choice." She remembers
being told by the CEO's, who were put off by his attitude, to never bring him back to a
meeting with them again. Hallett said that Canavan had a superiority complex and
refused to deal with anyone who wasn't at the highest levels of authority. She was asked
whether the industry disliked Canavan because he was aggressive on security. She
responded that she didn't know if he was doing anything at all.

Rulemaking

FOR OFFICIAL USE ONLY

 FOR OFFICIAL USE ONLY

Hallett stated that in calculating the cost/benefit of its rules the FAA was 100% wrong
about the costs to the industry—always on the low side.

Intelligence

t \t called intelligence "a joke." She organized a meeting after TWA 800 between the
^ CEO's and the FAA/FBI/CIA to talk about security intelligence. She said that the CEO's
didn't hear anything they hadn't read five times in the paper. She termed the meeting and
lack of information an "outrage." The industry never felt as if it was getting enough
^ information about intelligence, and depended completely upon the FAA for threat
information.
L\«*V/»-" \S

P^^ fr~ASecurity Directives and Information Circulars were sent to the ATA's security director
Vp £jtf\^ pusan Rork as well as the security directors for the air carriers. Hallett would complain
^2 to Jane Garvey that Security Directives would always be issued at 5 p.m. on Friday. This
was a problem because it made it hard for the air carriers to act on them expeditiously.
More often than not, however, Fran Lozito would give them a heads-up that the SD was
coming.

Hallett could not recall for certain whether she ever saw either the classified or
unclassified version of the CD-ROM presentation on the threat to civil aviation prepared
by Pat McDonnell of ACI in the summer of 2001, but she thought she had not. She was
certain that the CEO's had never seen the presentation, but that perhaps the air carriers'
security directors had.

She stressed that, in general, the view was that any attacks would occur overseas, even
though the 1993 WTC bombing and Bojinka brought the problem home.

stated that in all of the times she met with FAA/DoT she does not remember
Garvey or Mineta raising the issue of security as a problem. Usually the subjects
that were the priority dealt with safety. At least once a year the Secretary of
Transportation (Slater or Mineta) would meet with ATA and the CEO's and that security
issues never came up.

The Day of 9-11

On the morning of 9-11 Hallett was at a meeting of association heads that was hosted
routinely by Sen. Kay Bailey Hutchison (R-TX) at her office on Capitol Hill. During the
meeting Hallett's personal assistant called to say that a small plane had hit the World
Trade Center.

At around 9:05 a.m. that ATA representative at the Air Traffic Control System Command
Center in Herndon, Virginia called ATA HQ to say that the attack was a "terrorist
action."

FOR OFFICIAL USE ONLY

 FOR OFFICIAL USE ONLY

Hallett said that she told Hutchison about the attack and that she would have to return to
her office at ATA. Hallett said that the group continued its meeting and she departed.

Hallett asked that eight people be assembled in her office and to wait on her return,
including: Four senior vice presidents (Dick DiBrouva the security head was on vacation
in Italy); two lawyers from General Counsel; the head of safety and the head of Air
Traffic Control.

i \t 9:20 Hallett was back in her office. She tried to contact Garvey and Belger with no
' success around 9:30. Hallett then called Richelle (Spelling?), Garvey's personal assistant,
to give Garvey the message that ATA was recommending that FAA shut down the
national airspace. Hallett said she believed that there was such a serious threat that
aircraft needed to be grounded.

Hallett then directed her staff to contact the air carriers' security directors to make sure
they knew what was going on, while she called CEO's to give them the heads up. After
reaching about five of the CEO's she decided not to call anymore, because by that time
she was sure everyone must know.

Hallett said that for two or three days they didn't have any contact with Garvey. Instead
ATA was talking to the Deputy Administrator Monte Belger who was "really running the
show" in the aftermath of 9-11. Hallett said she wasn't sure what Garvey was doing.

Around 11:30 a.m. on 9-11, the building in which the ATA is housed was ordered to be
evacuated. Hallett instructed key staff to meet her at a park on I Street in downtown
Washington, DC. She split the group into four teams and ordered each to a separate
location where they would have access to a phone and fax. By 1:30 the teams were in
place and able to communicate by land line (cell phones weren't operational).

Hallett said that the best information she received was from Bob Baker at American
Airlines. He told her about the terrorist tactics on the hijacked flights. He related to her
the information received by American Airlines from the phone call placed by the flight
attendant aboard AA 11 that was received by the American Airlines operations center in
Dallas.

Hallett said that at no time did she hear any mention of a gun. At some point she
remembers hearing from the ATA representative at the ATC command center that a flight
from Dulles (not AA 77) had been delayed by mechanical problems and that a group of
Middle Eastern men were seen bolting from the flight. She's quite certain this
information was relayed to her after the Pentagon attack but before the UA 93 was
downed in Pennsylvania.

Sometime between 3 and 4 pm, ATA had a conference call with the FAA. The big issue
was how to get passengers to their final destinations, particularly people stranded in
Canada. This was left up to the carriers. Concern about screening of passengers was only

FOR OFFICIAL USE ONLY

 FOR OFFICIAL USE ONLY

for those who were going to re-board aircraft, rather than screening those de-boarding
from grounded flights.

Other than this information, she had no information that the 9-11 plot included any planes
other than the four hijacked flights. She said that some of the attention was focused on a
suspicious Delta flight that turned out to be not a problem.

Hallett was not aware of any effort to screen for terrorists on flights that were grounded
when the national airspace was closed.

Post 9-11 security measures

"\ \n the afternoon of 9-1 1 ATA and the FAA agreed that each would draft a list of security
^ ' measures that should be put in place before planes would begin flying again, and that
they would compare the list in a follow-up call.

Hallett said that in some instances ATA wanted stronger security measures than the FAA.
For instance, the ATA wanted to ban baseball bats and golf clubs in the cabin. The FAA
wanted to permit such items. Hallett says she believes the FAA took that position
because the wife of a prominent member of Congress was a lobbyist for the sporting
goods industry.

A* ^® Pm ATA and the FAA had their second conference call during which FAA
indicated to ATA that the National Airspace would be reopened on Friday. During this
call the organizations exchanged their list of proposed security measures. ATA's list
was mamly the 1 1 points the organization had proposed to the Gore Commission to
improve security, none of which had been implemented. An agreement was reached by
4:30 a.m.

Hallett said that she doesn't remember cost ever being an issue. She remembers ATA
only arguing about two measures:

j) 100% passenger bag match which she said "simply wasn't possible to do.
Hallett said that there was a huge push from Oberstar for a 100% bag match program, but
that it would have cost billions of dollars and did not address the suicide nature of the 9-
1 1 attacks.

2) A requirement that all mail and cargo be screened both for passenger and cargo flights.
The ATA and FAA agreed that the rule would not impact cargo flights and that packages
over 16 ounces would not be allowed on board passenger aircraft, while everything under
1 6 ounces would be screened.

While the carriers didn't agree with each on the list of measures, Hallett said it wasn't
worth "going to war" over the differences.

FOR OFFICIAL USE ONLY

 FOR OFFICIAL USE ONLY

The list of new security measures were listed in FAA Security Directive 108-01-03 A
issued on September 12 at 4:23 pm.

Hallett said that there were a few items on the list beyond what FAA and ATA had
agreed to, but at no time did she believe that ATA had veto authority on security
measures during their discussions. She described the effort as a "partnership."

V ^ On September 12 at 11:30 pm. Mineta had a conference call with the air carrier CEOs.
She said it was really just a wrap up of what happened on 9-11 and what the FAA would
be requiring. There was no negotiation taking place.

Hallett remembers having about one dozen calls with the FAA, and around six
conference calls with the CEO's.

After Action

( t ) \Hallett remembers having a meeting with the FAA during which they discussed creating
V_J ja plan for how to respond in 9-11 type terrorist attacks—including protocols for
information sharing, the process for bringing the system down, in whole or in part, and
the establishment of clear roles and responsibilities.

( A \she is sure that FAA did not conduct a comprehensive after action study of how the
\ j^ystem performed on 9-11.

FBI and ATA

the morning of September 12, Hallett received a phone call from a Deputy Director of
the FBI indicating that he had a list of individuals that should not be allowed to fly and
that he wanted the list distributed to the air carriers. Hallett said that the list included
"significant" terrorist figures who they found were ticketed to fly in the days following 9-
11. The FBI asked the industry to do three things with the list:

1) See if any of the individuals are ticketed

2) Stop the individuals from boarding a plane
3) Notify the FBI if any are ticketed or stopped.

Checking the list against passengers was done manually by ticket agents servicing each
flight.

Hallett said that the list provided by the FBI was terrible, and included hand notations
that contained classified information. She said the list represented "lousy" security and
was "unprofessional." Hallett called the FBI back and told them that she couldn't believe
the agency wanted her to distribute the list in its condition to all the air carriers. The FBI
told her to send the list back and they would clean it up.

FOR OFFICIAL USE ONLY

 FOR OFFICIAL USE ONLY

/ A/7""
\ On her own initiative, Hallett made an inquiry with the Airfsat Reporting Corporation
^*V (ARC) which was a spin-off of the ATA that collected and catalogued passenger
/ \ J ticketing information. She asked the ARC to put together the travel histories of the 19
^-' hijackers. Within an hour, ARC created a report and gave it to Hallett. The information
could be flush with leads about the hijackers, and possibly accomplices with whom they
traveled. The FBI never asked for such information. Hallett gave the information to the
FBI and CIA (one of Tenet's deputies) but she does not believe anything was done with
the information.

Hallett said that ARC's records go back four or five years.

Public Attitudes

r \ Hallett cited a poll that ATA commissioned with pollster Bill Mclnturff to characterize
V ' public attitudes about increased security measures after 9-11. (A copy of the poll is on
record with the commission). In general the poll showed that the majority of those polled
felt safe on planes, thought security was improving, and were willing to give up some
personal freedoms to improve security.

\ ) ^lallett felt that Congress didn't act quickly enough after 9-11 to seize the window of
V^ -opportunity to improve security, particularly in the area of profiling when such a program
was more likely to have been accepted. For instance, the government could have
successfully implemented a trusted traveler card but failed to seize the moment.

\0\The poll ATA commissioned showed that 50% of people polled favored a national ID
card.^

She still can't believe that the government allows people to get boarding passes over the
Internet.

Stand-up of TSA

Hallett's big criticism of the TSA is that the agency didn't want any input from the
carriers. She believes this has greatly hampered their effectiveness. TSA brought in a lot
of people who knew nothing about aviation.

Hallett said that when she left Customs she did a memo to the Clinton administration
suggesting that INS and Customs be combined but that it was probably ignored. Later,
she wrote a white paper that she gave to Bush and Gore during the 2000 election on
consolidation. She said the paper was given to Steve Goldsmith who got the ball rolling
on the consolidation under TSA.

Recommendations

Hallett believes that the single most important recommendation is to assure that air
carriers are involved when decisions are being made impacting civil aviation.

FOR OFFICIAL USE ONLY 10

 FOR OFFICIAL USE ONLY

She also believes that until we can get a profiling system, the threat of terrorism will
remain. She is convinced that profiling is the only way to protect the innocent.'

Also, Hallett believes that the aviation security complex has overlooked the effectiveness
of canine teams as part of the screening process. She said they are effective and low-cost.

With respect the allocation of cost and responsibility for aviation security, the pain should
be shared.

Hallett said that for the past 5 years ATA has been concerned about the operation of the
FAA technical center in New Jersey. Good technology is being overlooked. She
believes part of the problem is that political pressure from members of Congress
supporting home town vendors skews the process. In one instance, excellent technology
sat at the center and was not assessed for over a year. Hallett suggests that there should
be in investigative report on the technical center.

\j \t stated her strong belief that the aviation security system be run and controlled by
the federal government because national security, not just airline security, is at stake.

/ \\t thought the idea of including a safety/security committee to serve on aviation

Vx corporate boards was interesting, but that perhaps the important thing would be to make
sure that the board as a whole remained briefed and up-to-date on security issues.

Hallett also suggested that the 9-11 Commission needs to support a "need to know"
mentality about aviation security, so that the system is not compromised because
terrorists know our every vulnerability.

FOR OFFICIAL USE ONLY 11