Wharton MBA for Executives

This past Sunday morning I went to SFO to fly back down to LA. There was a decent line for security although it wasn’t too crazy. It looked like maybe a 15 minute line or so. But no worries for me, the CLEAR line was open so I walked over there and showed the CLEAR employee my card. She smiled, closed off the CLEAR booth (she was the only one working - her co-worker was taking a break), and walked me over to a kiosk. I inserted my card, pressed down my left index finger, and was cleared to go.

The lady walked me over to the front of the line, grabbed 2 bins for me, helped me put my laptop in one of them, got me set up on the conveyor belt, and said good-bye. I was on the other side within 3 minutes.

However, last night I was on facebook and saw “Miri…is out two benjamins for the now-worthless Clear Card” and thought WHAT?! No more CLEAR? You mean I have to actually stand in line with the rest of the riff raff? Ugh…I enjoyed being walked to the front of the line while everyone else stared at me and I waved and blew kisses at them as I strolled past their dreary line-waiting bodies!

I then went to flyclear.com and saw:
“Clear Lanes Are No Longer Available.

At 11:00 p.m. PST on June 22, 2009, Clear will cease operations. Clear’s parent company, Verified Identity Pass, Inc. has been unable to negotiate an agreement with its senior creditor to continue operations.”

A few hours later, I received an email from CLEAR telling me that they have ceased operations and that their lanes would no longer be available.

From my limited knowledge gained from Finance 738 (Funding Investments), it looks like Clear has filed (or is filing for) chapter 7 bankruptcy. They must have been doing really poorly. Otherwise, they would have filed for chapter 13, kept their door opened, and renegotiated their debts (redo some of their absolute priority, bring in some more senior (maybe supersenior) debt, etc.). Usually a firm is still worth more with their doors opened than closed so a current senior creditor may be willing to go lower in priority rather than get much less (few cents to the dollar perhaps) in bankruptcy court.

Anyway, I don’t remember how much I paid but I signed up for CLEAR when I enrolled in the Wharton program so it’s been a little over a year for me. I got a free one year extension through SPG (as a platinum member). I just checked a found my old post here: http://www.whartonblog.com/?p=67 (it looks like I paid $128 last year). I did notice a few things about the program:

1) It always seemed like I was the only CLEAR member around when I went to the airport. These employees spend most of their time standing around doing nothing.
2) $100+ for membership for a year is a lot of money during a down economy. It’s discretionary spending that most Americans will not spend.
3) Corporate travel is also way down because of the economy.
4) Most corporations did not pay for CLEAR membership for their employees and most employees aren’t willing to shell out their own money even if it saves time.
5) CLEAR makes sense if you travel a lot and the airports to travel from participate in CLEAR. However, if you travel a lot you probably have elite status with the airlines so you have special lines anyway. Heck, even Southwest has their A-List (although not enforced much) that lets you bypass some of the lines. In fact, I used my A-List card more often than my CLEAR card because on Saturday afternoons, OAK’s CLEAR stations are usually closed.
6) They tried partnerships (e.g. SPG for platinum members) to try to get people hooked on the service so that they would renew. I think it was a good strategy but they needed to have enough money to stay solvent during the free membership period.
7) Not enough airports had CLEAR. They were not in the Southern California market.

In summary, I’m sad to see the service go but I can’t say that I’m surprised.