IntroductionAirport security market growing, offering opportunities to big and small companies

Published 23 August 2009

The flood of government money in the wake of 9./11, aimed to bolster airport security, created a temporary over-capacity of equipment; with that over-capacity used, new technologies emerging, and more than $1 billion in stimulus package funds, the airport security market is poised for growth

Airport security refers to the techniques, methods, and equipment used in protecting airports and aircraft from terrorism and crime. The issue is not only the protection of the large number of people who pass through airports each day, and not only the protection of the passengers concentrated on large airliners. As the 9/11 attacks showed, the airplanes themselves may be turned into weapons to inflict death and massive destruction on targets on the ground.

There are many different technologies involved in airport security. The list would include, but would not be limited to:

  • Digital surveillance
  • Explosive detection
  • Biometrics
  • Perimeter and access control
  • X-ray and infrared
  • Metal detectors
  • Others” and integration
  • Closed-circuit television
  • Intercom and video door phones
  • Alarms and sensors
  • Fences and physical barriers
  • Night and thermal imaging

The combination of increased air travel in the next few years, growing reliance on biometric, RFID-equipped ID documents, and growing attention to two heretofore relatively neglected aspects of airport security — baggage screening and perimeter security — present good opportunities for investing in firms that develop or sell airport-security equipment (this was the conclusion last year of consulting firm Frost and Sullivan).

F&S notes that, for one thing, the airport security market is giving all indications it will start another boom period, following an initial rush of federal spending that came on the heels on the 9/11  attacks. In 2003 the Transportation Security Administration (TSA) purchases from security firms spiked at nearly $6.5 billion. That created a temporary “overcapacity” of equipment, according to Rani Cleetez, a F&S financial research analyst.

Thus, in the following year, 2004, aviation-security spending from TSA dropped to about $2 billion. Now, the top 30 firms in the field, which earned a collective $2.6 billion in 2004, are expected to bring in more than $6.1 billion in 2009.

According to Frost’s Ken Herbert, the “market mix” in both North America and around the globe is not expected to change significantly over the next few years. “Market mix” refers to the regulatory, political, and economic conditions that can confound predictions for the growth rate in particular industries or market segments.

Within the airport-security equipment industry, Frost expects to see particularly healthy growth rates in an unusually high number of industry sub- segments, especially digital surveillance and explosive detection. Other growing segments will be biometrics, RFID technology for baggage management.

The airport security market remains an area in which large and established companies compete with smaller start-ups.