The economics of airport security

Around 235 million passengers passed through Britain’s airports in 2009. Most of those – both arriving and departing – will have experienced significant delays due to security checks. While estimating the value of travellers’ time is an inexact science, the cost is likely to run into several billion pounds annually, particularly given the disproportionate number of high-earners who fly frequently.

There are also other costs, even more difficult to quantify. The high level of hassle and perceived unfriendliness may damage the reputation of the UK as a good place to do business or a welcoming holiday destination.Yet delays are likely to increase further with the introduction of controversial full-body scanners following the recent terrorist incident on a plane bound for Detroit.

The current approach would appear to be based on the politicians’ mantra of ‘something must be done’ rather than any sensible assessment of transport risks. Terrorism is insignificant in terms of death and injury. In the UK alone, for example, close to 3,000 people die on the roads every year. Low-cost road safety measures could be a far better use of resources than extra airport security. (Indeed, at the margin, longer airport delays may incentivise travellers to use their cars instead – actually costing lives.) There is also inconsistency in the policy towards different modes of transport, with next to no security on the trains or London Underground despite a similar risk of terrorist carnage (this is not an argument for stricter security controls on land transport).

A better long-term approach might be to give primary responsibility for air security to the airlines and airports. These firms would have a direct financial interest in improving the travel experience of their customers. Passengers could choose between high-delay, lower-risk and low-delay, higher-risk companies, according to their own subjective preferences. Airlines should also be free to set up ‘trusted flyer’ schemes to allow certain passengers to circumvent time-consuming and humiliating checks.

Giving responsibility for air security to airports and airlines is an interesting idea, especially for larger British carriers who could also attract more transit passengers that way. But will it lead to any improvement for customers? The airline industry is quite oligopolistic to start with – how will the proposed scheme have a higher degree of perfect competition? Moreover, it also raises the question whether the public wants law enforcement and defence effectively outsourced to private actors – I am not sure the British public is ready for it. Especially since a terrorist attack involving an airplane not only affects passengers onboard but could also be used against other targets (e.g., World Trade Center) and could, in the process, kill many more people who were never consulted in the delay/security trade-off.

Eric – Excellent points. Removing barriers to competition should be a priority. A Market in Airport Slots would be a good start. A large part of airport security is already conducted by private airport owners (e.g. BAA) but under strict guidelines from government, so I’m not sure the proposals would cause the public too much concern.Finally, you’re quite right that an airplane can be used as a weapon in a way rather different to other vehicles. Nevertheless, there are strong financial and reputational incentives for airlines and airports to prevent such incidents. We have no reason to believe that governments will be more efficient at dealing with terror risks.

Can’t say I’m convinced that the economy loses much if anything from people being delayed. Someone who is paid to complete a task (the position for many high-earners) might start later due to delay but then he just works an hour later to ensure the job is done. Your normal wage slave will almost never be flying on a working day so delay won’t bite into economically productive time. Or so I’d imagine. Mind you, I’m usually wrong.

Remember the days when we thought boarding a plane would become as easy as a bus? Skybus. Airbus. We’ve gone backwardsThe current 2 hours in advance check-in adds two or more hours to a journey. Often as long as the flight itself. Maybe a price worth paying for the reassurance of a safe flight? It seems the reassurance is worth no more than a neck massage. So who wants it? The airport. Two or more hours on a journey and you’ll want a coffee or food and something to do. Browse the shops; buy a magazine – at least. As airport security staff numbers grow so managers are promoted, to give training. And the security equipment manufactures. Is this a conspiracy?

Jack – I doubt the airports benefit from current delays. Passengers spend ages in queues at security rather than shopping. And the travel experience has deteriorated such that many won’t bother flying as often.FatBigot – It is certainly problematic attempting to measure the costs of the delays, as I suggested in the post. But one shouldn’t forget the opportunity costs associated with stricter security.

To bring in a more positive note: Does anyone remember the chaos that ensued when the new regulations on liquids in the hand lugagge took force, three or four years ago? Nobody understood what was still permitted and in which packing and quantity.
Then, private cosmetics suppliers responded quickly and started selling ready-made packages that conformed with all the regulations. Saved the hassle of squeezing shampoo into 100ml plastic bottles.

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