Flying High: U.S. Aviation Security Costs Keep Rising

Everyone is trying to cut costs these days, but that's easier said than done -- especially when your business is the nation's security. The Department of Homeland Security recently requested a budget of $56.3 billion for fiscal 2011, which represents an increase from last year's request of $55.1 billion.

The department says the budget serves to strengthen security against terrorism and other threats, while "reflecting the department's commitment to fiscal discipline and efficiency." And Homeland Security did announce some initiatives to cut costs: In one case, it's having some employee operations done electronically rather than by post, for an expected savings of about $4 million annually.

New and Unexpected Expenses

Much of that larger Homeland Security spending is slated to protect U.S. aviation and airspace. The 2011 budget calls for an increase of more than $433 million to purchase and install hundreds of advanced body-scanning machines at airport checkpoints across the U.S., as well as to train and hire staff to use them. It also includes a planned $85 million hike for more federal air marshals and an additional $60 million to buy some 800 portable explosives detectors.

But those are only the planned expenses. It doesn't help that the department has recently had some unexpected expenses to deal with.

Earlier this year, for instance, a lovesick university student jumped a checkpoint at Newark International Airport to kiss his girlfriend goodbye. The security breach brought airport operations screeching to a halt for several hours while stranding thousands of passengers. Officials have been reluctant to say just how expensive the Newark incident was, but analysts believe hundreds of thousands of dollars, at a minimum, were lost.

"Once you shut down the airport, you've got all sorts of costs," says Maclyn Clouse, professor of finance at the University of Denver's Daniels College of Business. "You have canceled flights, more missed connections, dollars incurred by the consumers. I would say [the cost of] shutting the airport down for a day, or hours like that, could be up in the six figures."

Interception CostsAdd Up

And then there was the situation just recently, when a Qatari diplomat was confronted by air marshals after he was discovered smoking in the lavatory of a United Airlines (UAUA) plane flying out of Washington D.C. As a precaution, officials from the North American Aerospace Defense Command, or NORAD, scrambled two F-16 fighter jets to escort the United flight into the Denver International Airport. The airport remained opened during the incident and had no impact on its operations, airport officials said.

But it costs about $7,500 per hour, including fuel and maintenance expenses, to put each of those F-16s into the air, according to NORAD spokesperson Lt. Commander Gary Ross. The aircraft were airborne for about 40 minutes, which would put the total cost of intercepting the United jet around $12,000.

That may not sound like much, but Ross says NORAD scrambles jets about 200 times each year in response to possible aviation security threats, such as potentially dangerous or unruly passengers (like in that last example), airplanes that lose radio contact with the Federal Aviation Administration or aircraft that stray into restricted airspace. "It's better to side on precaution, to send fighters up to have eyes on the aircraft," he says.

Airport Security Costs Consumers

Not all security events at major airports, which are already staffed around the clock, necessarily add up to additional costs for the Transportation Security Administration or other agencies.

Aviation officials acknowledge that every security event is unique. "The financial impact on airports regarding security breaches that result in terminal evacuations is dependent upon the duration, number of passengers and flights involved as well as the nature of the event," says Christoper Bidwell, vice president of security and facilitation with Airports Council International - North America, in an e-mailed response. "Since each airport is different, there is no set rule for determining the cost associated with security breaches."

But when those airport costs do tally up, it's the consumer who ends up paying, Clouse says. "Unless the U.S. government is willing to subsidize the airlines, which in fact is done in some other countries in the world, [the cost is] ultimately going to have to come in the form of higher fares," he says. "And we'll all pay that cost for higher security."