As of this writing, CLEAR (Clear Secure Inc., NYSE: YOU) shares are down 20% this morning after the company revealed that new signups were down to a trickle.
There were 7.15 million active Clear Plus members in the third quarter, according to a shareholder letter released Thursday. That was up just 0.8% from the prior three-month period, marking the smallest quarterly gain in at least two years.
In fairness, even after the drop the stock is up about 70% in six months and over 50% year-to-date.
Their value proposition to the customer is a faster security experience at the airport than TSA PreCheck. However,
- Their current biometric identification methods take longer than just showing a drivers license, and TSA makes them often require passengers to also show a drivers license.
- So it really comes down to having shorter lines that bypass standard queues.
- But the more people they sign up, the longer their own queues.
There’s a limited amount of space in terminals that they can acquire and staff, and limited TSA checkpoint throughput that they can access. Those don’t fully scale. So the more people they sign up, the less good the member experience and the less worthwhile the service.
Ultimately they have visions of a ‘walk-through experience’ that genuinely takes no time for a passenger to be identified. This would speed up CLEAR and allow them to grow without degrading the passenger experience (to a point). However, they are nowhere close to this.
They’ve raised price several times in the last few years, and clamped down on discounts. For instance, they are part-owned by Delta and by United and the discounts to SKyMiles and MileagePlus elites have been scaled back.
CLEAR got tremendous member growth from rebating the full cost of membership through American Express. They’d no doubt retain some of those customers if that merchant-funded offer was pulled, but they’d lose a significant number also – and when their member numbers decline their stock takes a hit. In April, the first of two one-year extensions in the Amex deal was exercised.
There are other places they could go for (free or discounted) member growth, but they can’t go everywhere. American Airlines blocks them from even setting up in terminals they control preferring slow Analogic screening devices instead. So AAdvantage is unlikely fertile ground to exploit.
Ultimately the paradox of CLEAR is that the more they grow, they less successful they become.
(HT: @crucker)
Finally that burst – i was a year early on that bet
Kind of like online dating sites- the more successful they are, the more customers they lose. Same principle applies to health care.
CLEAR is great- as long as there is no/short line. Denver is the worst, where people wanted to bail from the CLEAR line as the TSA line- though longer- was actually moving much faster, but the solid barriers in CLEAR they have prevent people from “rope-ducking”. That didn’t stop some from just going through backwards and jumping in the TSA line.
Some airports, like PHL, don’t have CLEAR at all.
I do think them using it at sports stadiums are interesting, but most of these (including DisneyWorld!) have switched over to some kind of passive detector system, greatly reducing wait times through security. But you still need to validate the ticket, and that could be improved… But is CLEAR going to go into the ticketing business? Seems a big stretch.
I have been a CLEAR member since inception (15 years?) even through their near-bankruptcy. I am generally happy with the experience, except:
– American makes me go through United at O’Hare and walk to the terminal; American at LAX T4 is unpredictable although they are usually open at T5. They are randomly open at Tom Bradley.
– I experienced the (exceedingly annoying) requirement to be re-validated with ID multiple times. CLEAR told me it happens to frequent travelers which is the reverse of what it should be. Happened less lately…
– I havent found long lines at CLEAR for the most part except EWR. Sometimes SFO but generally clears quickly (plus SFO with its private-contractor TSA is the fastest-screening airport in my experience).
– CLEAR at DEN is a joke but not their fault. Disaster of an airport in many ways.
CLEAR is a good an necessary service that I am happy to pay for.
I also read that airlines are investigating new technologies that allow their customers to get through the lines faster without CLEAR or “PreCheck”. This will also hurt CLEAR’s bottom line.
80% of the time regular PreCheck is faster than Clear. I have both.
Most of the time PreCheck is less hassle than Clear, especially when TSA is inserting the ID into their machine and doesn’t need your boarding pass. It’s a single document and you’re done. Usually Clear wants to see your boarding pass twice, first to see if you have PreCheck, then again on their machine (why can’t they consolidate this). then it’s IRIS scan or fingerprint. then BP. Then show the BP to TSA and usually your ID again. It’s more cumbersome than PreCheck.
i don’t understand the statement re: the AA embargo in their terminals and the existence of ANAL ogic machines – this is conflating identification with luggage screening – @gary please clarify
Since airports let Clear queue jump, I wish the quick demise of them. Fortunately, the people who use my airport have shunned them. I can’t remember the last time I saw anyone us them there.
I was a CLEAR member since the very beginning and didn’t renew this past summer. My home airport is Denver and it takes longer going through CLEAR than the regular TSA Precheck line. It continues to get worse instead of better.
Classic business case of too much success- consistently longer lines for CLEAR vs PreCheck. Also, last experience at EWR with 10+ machines available, 3 CLEAR employees screening psgrs and 4 standing and chatting amongst themselves. Bailed CLEAR in May after 8 years, was great when it was faster.