Like many ideas, the Clear lane at airport security checkpoints was born of necessity—the long security lines after 9/11—and seemed brilliant at the time. Why not provide a private sector alternative, fast passage through security lines, to the TSA? But last week Clear, owned by Verified Identity Pass Inc, became one more wreck along the Venture Capital highway. Two smaller competitors, FLO and Vigilant, continue to operate.
Originally priced at $99 per year, but increased to $199 last year, the Clear card promised to...
help customers bypass long security lines. However, despite having providing personal and biometric data, customers still had to remove their shoes and walk through TSA metal detectors. When security line wait times became more reasonable as the TSA improved their service, the benefit of holding a card became less Clear.
Clear suffered from the same business model problems as DayJet. In both cases, a large, expensive network was required to make it worthwhile to become a customer. Clear was available at 20 airports, making it attractive primarily to customers who lived near one of those airports, since they’d be guaranteed to be able to use it at least 50% of the time. However, with so few airports in the network, relatively few customers could use it all the time.
Regardless of the number of paying customers, each airport required a lease agreement, which cost Clear $300,000 at just San Jose International Airport, and a staff of 2 to 3 security officers. As a frequent user of San Jose International, I observed that Clear staffers were usually standing around talking, not a sign of a robust business. Rarely did I see even a single customer being processed.
Likewise, DayJet needed a large number of nodes in their network to make it attractive for customers to sign up for their innovative Light Jet-based, per-seat, on-demand air taxi service. In both cases, the companies ran out of money before they could build a network big enough to attract customers in sufficient numbers to deliver a return on the huge up-front costs.
Reports indicate that anywhere from $44 to $116 million of investors’ money has gone into the company since 2005 and that founder Steve Brill left the company in March to start another company, Journalism Online. The new company aims to help newspapers survive the downturn in their business.
Questions Remain
1) What will become of the personal data of Clear’s 260,000 customers? While the company said Friday that data was deleted from each of the airport kiosks, it must have also maintained a central database to update each of the kiosks and most likely that data has been retained. The database is probably the only remaining asset of value and could be possibly be sold as part of a bankruptcy proceeding.
2) Would you pay $200 per year to bypass the TSA lines some of the time? Do FLO or Vigilant have any operating advantages versus Clear and will an alternative to the TSA lines continue to exist? If not, will more travelers turn to General Aviation as an alternative to the airlines?
Two things are certain. New companies and new ideas will continue to emerge. And 80-90% of them will disappear within 5 years. If there’s one lesson to be learned, it is to beware of the death rattle of the 10-year special offer!
As always, a fantastic article. I travel out of San Jose on business about 2-3 times a month and debated if getting a Clear card was worth it. It always seems tempting when you're standing in that snaking security line for 45 minutes. But as you pointed out in your article, I rarely saw any customers there. The Clear staff were just standing there. That was a big enough sign for me to not join.
Posted by: Terry Blanchard | July 13, 2009 at 02:03 PM