Playing Catch-Up In the Fast Lane
Chantilly Firm Takes On Deep Pockets In the Race to Lead Airport Security

By Kendra Marr
Washington Post Staff Writer
Monday, July 7, 2008

FLO, a small Chantilly start-up, saw opportunity in speeding frustrated travelers through airport security.

Pre-screen fliers with government background checks and give them smart cards imprinted with their personal information and iris and fingerprint scans. Create separate fast-pass security lanes, lined with kiosks that verify identities, then send these fliers past the long lines directly to X-ray machines and metal detectors.

Only one problem: Another company got there first.

And it wasn't just another start-up. It was New York media mogul Steven Brill's newest business venture.

Brill's Verified Identity Pass is the dominant player in the new registered traveler industry. The company, which has been enrolling members into its Clear program since 2005, has signed up more than 175,000 travelers nationwide for its $128 annual membership. It has advertised its new card in magazines and newspapers. It staffs kiosks in many major airports to register new members.

FLO, which stands for fast lane option, launched last year after separating from Saflink, now Identiphi. The company says it has fewer than 5,000 members. With limited funds, FLO has been unable to advertise or staff airport enrollment booths.

So the start-up has set its sights on the itinerant businessmen, the core demographic signing up for this fast-pass service. FLO saves money by forgoing advertising and instead sets up registration booths at industry conventions, knowing its prime target will be in attendance.

The company also is rolling portable registration kiosks into offices, signing up employees during their lunch hours and breaks, and enticing them with discounted cards. FLO has visited firms such as Washington's Dickstein Shapiro and Dean & Co. in Vienna.

"Our attorneys travel constantly," said Sharon O'Meara, Dickstein's chief administrative officer, who helped bring FLO, which is also a client, into Dickstein's office. "They're business-traveler savvy. They know what to do when they go through security. You don't want to get behind a family traveling with children and strollers." About 50 people enrolled at Dickstein.

Much like a corporate frequent-flier program, FLO cards have added benefits. For the basic membership fee of $100 a year, benefits include discounts on golf club rentals and medical assistance. For $200 a year, members get additional perks such as emergency cash transfer assistance and concierge help with golf reservations.

"We deliver more value with our bundled services," said Luke Thomas, executive vice president of FLO. "You get more value at a better price point."

It's logical that FLO's business model mimics a corporate rewards program, said Robert Mann, an airline industry analyst. Under Transportation Security Administration mandate, all registered travelers must be able to move through interoperable fast-pass lanes, so one card doesn't have a speed advantage.

"All you can do is add bells and whistles around the edge of the experience," Mann said.

Thompson said in the future he envisions companies will be "powered by FLO," much like some computers advertise "Intel inside." FLO has teamed up with travel management companies such as Tzell Travel Group and Radius as the preferred provider of registered-traveler services. Recently FLO partnered with ASIS International, an organization of security management professionals, to exclusively provide its services to the group's 36,000 members and associated companies.

On a recent trip to Washington, Robert Langsfeld, president of Hotel Solutions in Nevada, was transferring at San Francisco International. The first leg of his trip was running late, and the airport's layout had Langsfeld passing through security again. He had just 15 minutes before his connecting plane took off when he inserted his FLO card into the fast-pass kiosk.

"I was in heaven," said Langsfeld, who managed to catch his flight. "The regular lines were just horrible. That one trip alone was worth having the whole thing."

Of course, FLO and Verified are both quick to point out each other's faults.

FLO says that Verified is not as transparent with its business practices and that Verified's registration kiosks staffed around the clock are inefficient.

Verified says FLO is too new and not yet established. In October FLO had agreed to purchase Unisys's rtGO smart cards and equipment for these fast lanes, but it struggled to secure the $5.25 million needed until May.

And there has been fighting over who is responsible for paying for the infrastructure for the fast-pass lanes. Verified pays to staff and operate its lanes at 17 of the 19 registered traveler airports. FLO operates one.

In 2005, the Transportation Security Administration piloted the registered-traveler concept at Orlando International Airport. Since then, the agency has worked with businesses to expand the program.

"If it wasn't for the private sector, it would have just died," said Hans Weber, chief executive of Tecop International, a security consulting firm in San Diego.

Today, TSA has authorized eight vendors, including FLO's recently acquired Unisys system, to provide registered traveler services. Only one besides Clear and FLO is up and running, and on a localized scale.

"It wouldn't surprise me if a major travel company were to launch a competing registered-traveler program," said Brill, chief executive of Verified Identity Pass, the New York company that operates Clear. "People are still waiting for us to prove the business model a little more."

Brill has been aggressive in developing and adapting his Clear program. He's pushed for new technologies such as shoe scanners at Clear checkpoints and each day reads 100 comment cards from Clear members who review the service and suggest improvements.

And like FLO, it has started carting its enrollment kiosks to office buildings.

Clear intends to stick with its current model, Brill said. When it first began testing its card, the company asked participants in a focus group if they would like their smart card to act as a credit card.

"People got up and left the room," Brill said. "I've never seen such a negative reaction. When you start raising the idea of linking financial transactions, it gives people the willies."

Although FLO does not link to credit cards either, it has the added-benefits niche to itself.

At a recent Association of Corporate Travel Executives convention in Washington, a steady stream of corporate executives lined up to register for a FLO card.

"Do you want the State Department look," joked Duane Futch, director of Wal-Mart's global travel services, as he smiled for the camera, "or the I'm-really-enjoying-security look?"

The week before the convention, the company sent out an e-mail reminding attendees to bring their passport and driver's license for registration. The conventioneers had heard of Verified's Clear card. But the fact that they could sign up with FLO between workshops? Well, that was just too convenient.

At the end of the three-day conference, FLO had enrolled about 100 new members.

"The market will determine the winner -- or winners," Thomas said.