For the safety of the country there are certain things that need to remain secret. Some complain our government doesn't do enough to protect us. Others see the boogeyman behind everything the government does.
Criteria for no-fly list? I imagine there is an element of secrecy there and it would largely depend on intelligence generated through a number of sources. Are there mistakes made? Of course. Unfortunately the process is administered by human beings who are flawed vessels at best.
In a republic, the people must be able to hold their representatives accountable and ensure they are working in the country's best interests and obeying the law. Secret policies like the one governing the members of the no-fly list work against people wanting to know what their government is doing and why. It is not a matter of whether we are protected or not. It is a matter of transparency in a government by, of and for the people. That's not to say that the policy governing the no-fly list should be published in the New York Times. But if the government can hide behind the state secrets privilege to bar people from finding out why they are on the list and how they might get off it, they are denying those people their right to redress of grievances.
It is true that some things must be kept secret. But part of the issue here is that in order to be trusted with secrets, you must be that; trusted. Members of the intelligence and national security apparatus have been found lying to Congress, the judiciary and the public on numerous occasions. When they say we must simply trust them that they are doing the right thing, any thinking person should be skeptical. They have blown their credibility and have lost the trust of the people they are supposed to be protecting. That's not a good thing.
It should be noted that in the seminal case that established the state secrets privilege, United States v. Reynolds, the government used the national security argument to hide negligence. In the very first case that they used that argument, they used it to cover something up (lax maintenance that led to the downing of an aircraft). So it has been a dubious privilege from the start. Given their track record since, there is no reason to trust that the government is being honest in their invoking the privilege now. They may indeed be on the up-and-up. But that needs to be independently verified, and that should be the job of the court.