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.

13 January 2010, IEA Blog

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