The REAL ID Act has been delayed by two years to May 2025. While a surge of issuance was anticipated with the original deadline—as REAL ID–compliant credentials are required for air travel—a potential surge has been lessened and smoothed with the deadline’s delay as there is more time for credentials to hit their expiry.
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The REAL ID Deadline Sees Yet Another Delay
Following the September 11, 2001, terrorist attacks, the United States sought to put more stringent controls in place on the types of documentation accepted for boarding federally regulated commercial aircraft. Enacted on the 9/11 Commission’s recommendation, the REAL ID Act establishes minimum security standards for license issuance and production and prohibits certain federal agencies from accepting driver’s licenses and identification cards from states not meeting the act’s minimum standards. The REAL ID Act pertains to accessing federal facilities and entering nuclear power plants as well as for boarding aircraft. Despite initially being passed in 2005, the provisions for the REAL ID Act have yet to be completed. Most recently, the act’s deadline has been set back from May 2023 to May 2025 following numerous delays, even though all U.S. states have gained compliance and have begun issuance of a REAL ID–compliant driver’s license beginning in September 2020. The infrastructure is in place, but many citizens who were issued their credentials before their state gained compliance continue to have a noncompliant credential.
The Deadline Delay Will Lessen a Potential Issuance Surge
When the deadline is eventually met, those U.S. citizens without a REAL ID credential will be unable to travel by aircraft, necessitating renewal of their credential, even if the renewal falls ahead of its expiry. While citizens do renew their credential ahead of its expiry, a potential surge of issuance is possible due to disrupting the natural renewal cycle. This surge would continue to affect the market across each renewal time span—typically from four to eight years—playing an important role in the approach of ID players in terms of anticipating demand. The surge would then be followed by a period of decreased issuance as would-be renewals will have already been made.
Important questions to ask when assessing if the Real ID deadline will cause a surge of issuance are: How many citizens will renew their credential ahead of its expiry date? And would this occur within a fairly short time span just ahead of the deadline? Before the deadline delay, fewer citizens holding a noncompliant credential would have met their natural renewal by May 2023; there would be a larger pool of non–REAL ID holders that would potentially require renewal ahead of expiry to fuel a demand surge. Allowing an extra two years for citizens to naturally hit their credential expiry results in a smaller pool of people who will need to renew their document ahead of the cycle. To put this in context, considering the date that each state had begun issuing a REAL ID and the expiry length of the document in each state, 36 states will have already renewed their credentials to a compliant one by 2025. With the original 2023 deadline, the number of states who would have completed a renewal cycle “naturally” by the deadline is only 25. For this reason, the deadline delay should lessen an issuance surge in response to the REAL ID Act’s coming to fruition.
The Importance of Issuance Cycles in Demand Modeling
The COVID-19 pandemic, continued chip and material supply concerns, and the state of the macroeconomy have led to raised uncertainty and increased difficulty in modeling demand. Issuance cycles and the implications of new standardization have become another factor that vendors must be vigilantly aware of. We have already seen how COVID-19 has disrupted the renewal patterns of passports, resulting in a surge as travel limitations ceased, and this will recur every passport expiry time span. While globally U.S. driver’s licenses are a smaller market than passports, the implications of the REAL ID Act should still be followed closely by vendors involved in the production and issuance of IDs.