Report highlights security burden

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The security spend by European airlines and airports rose to €3 billion ($4 billion) in 2002 in the wake of the 11 September attacks, according to a new report by the European Commission (EC).

Airlines footed the bill for nearly half of these security costs, spending an estimated c1.7 billion, including additional insurance and mandated cockpit door modifications (see table). The cost of surveillance, IT and staffing made up the remainder of the airline spend.

The report estimates that security costs in 2002 had soared to an estimated c3.6 billion across all stakeholders in the 15 European Union (EU) member states, plus Iceland, Norway and Switzerland. Airports accounted for a third of the spend with the rest directly from states.

Just under c2 billion was recovered through taxes and charges, but still leaving close to half unfunded. Common EU security guidelines were agreed at the end of 2002, but the EC put aside the funding issue after member states refused to agree to a proposal by the European Parliament that they should take on at least some of the extra cost burden. The EC says in the new report that it may bring forward legislation that addresses this issue.

The study also highlights the vast differences in attitudes towards security funding across Europe, with taxes varying from 8 eurocents to c5 per passenger, with an average of c1.08 per passenger. The study concludes that for most states the operating result was neutral, with security taxation income around the same level as expenditure.

There were also wide differences between charging systems at airports, ranging from 17 eurocents to over c10 per departing passenger. Airports were nevertheless left with a shortfall of some c720 million, although c320 million of this deficit comes from UK operator BAA and Copenhagen, where security costs are recovered to some extent through other airport charges.

The report concludes that the impact of security taxes and charges on long-haul ticket prices is less than 1% for economy class, and less than 0.5% for average business class fares. The figure rises to 1-2% for intra-European routes and 3-6% for domestic routes.

The proportion paid by low-cost passengers "could be significantly higher" the report adds, although there are dramatic variations. For example, 1.3% of an easyJet fare pays for security out of London Luton, but 13% when departing from Amsterdam Schiphol.

The EC does note the financial assistance of $32 billion provided to the US aviation industry by Washington from 2002 to 2004.

A colation of European carriers, airports and pilots' unions describes the report as a "wake-up call" for regulators. "The European aviation industry does not seek state aid, but merely the transfer of a clear public responsibility back into the hands of governments," it says.

COLIN BAKER LONDON                                     

European security burden 2002

Expenditure   

€ million

Share

Airlines Security

515

14%

             Cockpit doors 

330

9%

             Insurance

819

23%

             Subtotal

1,664

46%

Airports

1,316

36%

State

654

18%

Total expense

3,634

100%

Funding

€ million

Share

Airline surcharges

630

32%

Airport charges

605

31%

State taxes

590

30%

State grants   

130

7%

Total funding

1,955

100%

Shortfall

-1,679

-46%

Note: EC estimates for 15 EU member states plus Iceland, Norway and Switzerland, based on expenditure/funding in 2002.