The experience of flying changed forever a decade ago when two commercial aircraft were flown by terrorists into the Twin Towers of the World Trade Centre in New York and into the Pentagon, in Washington. Over 3,000 people were killed.
The event had a huge impact on the bottom-lines of airlines across the globe. According to the Geneva-based International Air Transport Association (IATA) there was a $22-billion revenue drop between 2000 and 2001. It took the aviation industry three years to recover the revenues that had fallen between 2000 and 2001.
Global passenger traffic dropped by 2.7 per cent in 2001. It was only in 2003 that this figure surpassed the level recorded in the year 2000. Global airline revenue declined from $329 billion in 2000 to $307 billion in 2001and to $306 billion in 2002.
This drop meant that airlines lost $13 billion in 2001 and another $11.3 billion in 2002. Worse, within months of the attack, Swissair and Belgian airline Sabena went bankrupt as these financially weak carriers could not face the impact of the September 11 attacks.
Plummeting profits
Coming as these attacks did when the aviation industry was already in a weak financial position — global airline profits had fallen to $3.7 billion in 2000 as compared to $8.5 billion in 1999 — airlines now also had to spend more on maintaining security. To make matters worse for the global airline industry, there was a further dip in revenues thanks to the global financial crisis in 2008. Today, there is a silver lining as IATA estimates show that airline revenues are picking up and are expected to be around $598 billion in 2011, almost twice the $307 billion revenue the airlines earned in 2001. Further, airlines are expected to carry 2.8 billion passengers and 48 million tonnes of cargo during the year.
It is perhaps this resilience that has started a debate on who should foot the additional bill for security.
Who will foot the bill?
Conceding that there is no “such thing as 100 per cent risk-free security” an IATA document brought out ten years after September 11, says that the annual cost of aviation security today is estimated at $7.4 billion.
According to IATA, the $7.4 billion that the industry is paying for enhanced security measures includes the money being spent on passenger operations, airports, aircraft and employees. It spends $2.03 billion for passenger operations and $1.46 billion on aircraft security. These figures do not include the cost of airport passenger screening, which are borne by airports or government bodies.
IATA feels that since security is a national issue these huge costs should not be paid for by airlines but largely be borne by governments across the globe which should also coordinate with one another for developing and deploying these security measures.
With the aviation body insisting that it is time to transform the 40-year-old framework of airport security into one that is more convenient for flyers and more effective in handling situations such as September 11, expenses on security are only likely to go up.
There are many others who think that IATA is right and that it is governments that should foot the burgeoning security bill. However, till this happens it is the airlines and passengers who will have to continue paying for enhanced security measures that have become mandatory and common across the globe.