The Bottom Line

Dec 11, 2002 12:00 PM, Paul Rothman

Just how much will it cost to secure U.S. airports? Aviation industry officials and Congress say the costs this year alone can run more than triple what has been budgeted. Installing explosives detection systems and staffing each airport with federal screeners hasn’t been cheap.

“The total estimated increases in taxes, security-related costs, insurance rates and the revenue losses from other governmental policy decisions account for more than one-half of a $7-plus billion industry loss in the year 2002,” says Carol Hallett, president and CEO of the Air Transport Association.

Seeking to make the passengers pay for security, the Federal government imposed an airline ticket fee of $2.50 per flight segment with a maximum of a $10 fee per round trip. The fee will account only for $1 billion a year — a far cry from the $6.8 billion in funds the Transportation Security Administration has requested from Congress.

But different financial numbers are coming from a variety of sources. The TSA says it needs nearly $7 billion. The FAA estimates that explosives detection machines alone will cost more than $2 billion. U.S. Department of Transportation Inspector General Kenneth Mead, who serves as a sort of watchdog to the agencies, has yet another view.

“The agency’s budget includes $1.9 billion to buy baggage screening equipment and hire operators,” Mead says, “but not an estimated $2 billion that airports will have to spend to strengthen floors and make space for machines.”

Who will pay then? “Aviation security is national security, and it must be treated and funded as such,” Hallett says. “We should not expect those who fly to shoulder the full cost of protection from aviation terrorism.”

The airports themselves have turned to the Airport Improvement Program (AIP), which includes a trust fund supported entirely by taxes on passenger tickets, aviation fuel, and other users of the Airport and Airway System. The General Accounting Office recently conducted a survey that revealed that of the $3.3 billion available in the fund in 2002, $561 million (17 percent), was used to fund security projects at airports. This $561 million was a dramatic increase over amounts spent in the past, when less than 2 percent of AIP funding was spent on security projects on average. Prior to FY 2002, the high point for security projects spending was $122 million in 1991, shortly after the bombing of Pan Am 103 and the passage of the Security Act of 1990.

The FAA and TSA’s latest request for funding does not include money to reimburse airports for the millions of dollars in security expenses they have incurred since Sept. 11. But the request calls for shifting up to $100 million in critical resources from AIP or FAA facilities and equipment to the operations account of the FAA to cover increased security costs the agency has incurred at air traffic control facilities.

The Department of Transportation has also proposed a $750 million annual fee to be apportioned among the airlines by the TSA, which would replace the current method of basing the fee on costs incurred by the airlines in 2000.

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