11/9 Changed the way the world takes to the sky
Aircraft were the chosen weapons of the September 11 terrorists. On that day the aviation industry, a vital part of the logistical infrastructure of the global economy, came to be perceived as a potential threat to international security. The industry and its customers have been paying the price ever since.
Scott Hamilton, a US-based aviation analyst with Leeham Company, said: “The US carriers were most affected by a total shutdown of the air traffic system for several days and the depressed traffic levels for months afterwards that affected airlines worldwide.” Hamilton said the incident cost the airline industry billions of dollars in revenues and profits. “The initial impact, which continued for several years, was the loss of billions of dollars in revenue and billions of dollars of increased security costs, the latter continuing to this day,” he said. He added the security measures put in effect that still exist are “intrusive, inconvenient and often questionable” in their effectiveness. “Since airlines pay for these measures, the cost from September 11 continues,” said Hamilton.
The incident completely changed the way the world travelled prior to September 11. “The industry continues to be justifiably paranoid about security risks,” said Hamilton. “But except for the lingering security issues and occasional terrorist plot, the industry has recovered from September 11.
“The security companies bene-fitted a great deal from September 11. They have more new lines of business in training flight crew on planes, special operation units that deal with hijackers, developing new technology to uncover new types of explosive devices and scanners to identify concealed weapons,” Riad Kahwaji, chief executive of the Institute for Near East and Gulf Military Analysis (INEGMA), told Gulf News. Companies such as OSI Systems Inc, whose Rapiscan unit makes airport security machines, saw its annual revenue grow from $111 million (Dh407.65 million) to a high of $623 million in 2008. Analysts project revenues in the $700 million range for 2012.
The transport sector, including airports, underground trains and courier companies, has seen the biggest impact from security fears after September 11 — and passengers are paying the price in time and money, said Kahwaji. Increasing costs of insurance, security and air marshals on planes have hiked the cost of travelling, he noted. Airports are forced to hire more security guards, buy electronic scanners, train personnel, monitor conveyor belts carrying luggage and invest in counter-terrorism technology.
“Travelling after September 11 is a whole new era, this is a historical phase that we have entered,” he said. The aviation industry faced further turbulence in the form of the global economic crisis that followed later in the decade. “The aviation industry has been facing events unrelated to terrorism, such as the global recession, the Japanese earthquake and tsunami, and oil disruptions due to the Middle Eastern Spring’, just to name a few,” said Hamilton. He added that health crisis, such as the SARS [Severe Acute Respiratory Syndrome] in recent years, also affected the air travel industry.
Looking ahead, Hamilton said that business is certainly more expensive for airlines because of increased security costs. But, “for the consumer, prices go up and prices go down. It would be tough to tie any long-term price cycles directly to September 11 at this stage,” he said.
As for the continuing security costs which are borne by the airlines, Hamilton said those are the “long-term financial impact. The impacts in the days, weeks, months and short-term years after September 11 have largely dissipated. Some airlines went out of business as a result of September 11 but others have sprung up. It all balances out,” he said.
Burden, big money to avoid risks
A decade after the September 11 attacks exposed US vulnerability and its intelligence failures, the security industry has been affected from America’s increasing vigilance. The US has spent an additional $400 billion on security plus $1.3 trillion on the wars in Iraq and Afghanistan, according to the Costs of War research project by Brown University’s Watson Institute for International Studies. America’s economy may be stagnating but defence spending and the cluster of security and intelligence establishments around it have had a bumper decade. US defence spending in 2011 totalled a whopping $700 billion, including the cost of wars in Iraq and Afghanistan, according to another estimate.
One monument to the craze in US national security spending is the $2 billion 1-million-square-foot facility in Utah designed to scan the mass of digital information — trillions of e-mails, web searches and commercial transactions — gathered by the National Security Agency, the US government’s electronics eavesdropping body.