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53 5.1 Published Cost Estimates Agency estimates of the cost of compliance with security requirements are limited. One security rulemaking docu- ment (Table A-4, Item 21) included a projection of costs. The regulation amended Parts 107 and 108 to expand the scope of the criminal history check requirement. Annual costs to all entities (airports and carriers) were projected to be $2.8 mil- lion. The regulation transferring security requirements from the FAA to the TSA (Table A-4, Item 27) noted that the rule would add costs to aircraft operators and stated that an assess- ment of costs would be conducted in the future. None of the other compliance actions listed in Table A-4 included estimates of costs. An assessment of the likely cost impacts of the SDs and emergency amendments would have required a discussion of the nature of these documents, which is SSI. 5.2 Airport Population Affected by Requirements The security requirements adopted during the study period generally apply to all Part 139 airports. The applicability of specific provisions in some cases may depend on a particular airportâs security classification, but the specific requirements generally involve SSI. Because the specific security requirements adopted during the study period mostly involve SSI, the security survey questions focused on whether airports had installed or modified equipment or systems to comply with new security requirements during the study period. 5.2.1 Security Equipment and Access Control Systems The survey identified six security systems used for access control or used to support access control or security. Figure 28 summarizes the Phase 1 responses. A low of 47 percent of responding airports installed or modified breach prevention systems or equipment. A high of 78 percent installed or modi- fied a physical access system. 5.2.2 Screening Requirements Following the events of 9/11, passenger and checked baggage screening requirements were enhanced. At many airports, screening facilities or equipment were modified. In addition, in 2006, the CBP issued new guidance on design and construc- tion for CBP inspection facilities (Table A-4, Item 77). As shown in Figure 29, 79 percent of airports executed a project for passenger screening, and 78 percent executed a project for checked baggage screening. Only 27 percent of airports reported being affected by the CBP design standards. This lower percentage probably reflects the lack of CBP activ- ities at many small airports. 5.3 Unit Cost Estimates from Phase 2 Survey Results Technical Appendix 4 provides detailed cost information on the requirements discussed above. The data is presented in a series of tables with discussion. The format of the tables and discussion is comparable to the format used in Techni- cal Appendix 2 for data on FAA and DOT requirements, as described in Section 3.3. Table 9 summarizes the most significant initial costs of secu- rity equipment and access controls and summarizes the initial costs of complying with passenger, baggage, and immigration and customs screening requirements, based on per-airport costs. A per-airport total cost for screening and access control equipment cannot be calculated, because each responding airport did not acquire the same kinds of equipment. There did not appear to be a relationship between the costs of any of the individual security requirements and either commercial operations or passenger enplanements. Therefore the data is presented only for cost per airport. C H A P T E R 5 Cost Impacts from Security Requirements
54 Figure 28. Airports installing security equipment or access control systems. 78% 71% 67% 61% 55% 47% Physical access system Closed circuit television (CCTV) monitoring system Airports Any other equipment or systems related to or supporting access control Any perimeter security systems or equipment Credentialing and biometric (including biometric information on credentialing media) Any breach prevention systems or equipment Figure 29. Airports executing passenger or baggage screening and CBP projects. 79% 78% 27% Airport executed any project in the last 10 years to accommodate enhanced passenger screening Airport has executed any project in the last 10 years to accommodate enhanced checked baggage screening Airports Since 2000, airport has been aï¬ected by the Airport Technical Design Standards of U.S. CBP
55 A summary of recurring costs was not prepared because the survey did not generate sufficient recurring cost data. As shown in Table 9, the most costly requirement per airport was âany otherâ equipment or systems related to access control (~ $1.3 million). The second most costly requirement was enhanced checked baggage screening ($768,055). As shown in Technical Appendix 4, the least costly requirement was credentialing and biometric equipment (~ $47,000). Two other categories of costs were not included in the sur- vey but were discussed in the case studies. First, airports are required to provide law enforcement officer (LEO) presence or availability for passenger screening checkpoints. Second, airports are required to provide screening space to the TSA on a rent-free basis. Airports are entitled to reimbursement for utility costs and certain maintenance costs, but not all airports seek reimbursement. The case study airports noted the LEO expense, but only one airport, Huntsville, could estimate the costs. Four out of the five case study airports were able to estimate the annual lost rental income resulting from the rent-free space requirement. Figure 30 summarizes the lost revenue reported by these airports. For airports with TSA space funded by AIP grants, the grant assurances preclude charging the TSA rent in any event, however. Also, some airports may include the cost of TSA space in calculating terminal rental rates for airlines. 5.4 Relationship of Costs and Activity Levels The data was analyzed to determine any relationship between the costs of security requirements and two measures of activityâpassenger enplanements and commercial opera- tions, as described in Chapter 3. Only one security requirementâinstallation of closed circuit television (CCTV) systemsâhas a relationship, based on the results of the data analyses. However, even after excluding outliers, the responses are skewed. Three out of 16 responses had costs in excess of $2.1 million, with the next highest cost of only $500,000. Enplanement counts in the sample are also skewed. Oklahoma City had the highest enplanement count Table 9. Summary of initial per-airport costs of security requirements. Requirement(s) Estimated Cost of Compliance 25th Percentile 75th Percentile Interquartile Mean Security Equipment & Access Control (Most Costly) Any other equipment or systems related to access control $640,000 $1,880,000 $1,260,000 Physical access system $176,531 $1,576,162 $538,137 Screening Equipment and Facilities Enhanced checked baggage screening $121,695 $2,500,000 $768,055 Enhanced passenger screening $55,000 $2,330,000 $637,377 Customs and Border Protection $275,000 $450,000 $375,000 $49,600 $193,750 $275,000 $350,000 Golden Triangle Regional Stewart International Huntsville International Santa Barbara International Lo st R ev en ue Figure 30. Lost rental revenue from TSA screening space.
56 at 1.7 million. The second highest passenger count in the sample was only 643,000. Moreover, the cost of a CCTV sys- tem is most likely a function of the area and complexity of the terminal layout. The volume of passenger traffic is a significant consideration in the design of terminals, but typi- cally once facilities are constructed, they remain fixed until a major addition or renovation is undertaken, regardless of the year-to-year fluctuation in traffic. Moreover, terminals are often designed to accommodate expected future, not current, traffic levels. The basis for the correlation, thus, appears to be weak. 5.5 Industry Cost Estimates Industry cost impacts were determined using the same methodology as described in Section 3.3. Because there did not appear to be a relationship between costs and activity levels, industry costs were estimated using average cost per airport based on the interquartile mean. Table 10 summa- rizes the industry costs of the security requirements included in the survey. The table provides the estimate of the indus- try costs for the two most costly requirements for security equipment and access control, based on industry costs, and the industry costs for each of the three screening require- ments. Because industry costs account for the number of air- ports affected by individual requirements, Table 10 includes an estimate of the total cost for requirements for security equipment and access control, and total costs for all security requirements. As shown in Table 10, total initial security compliance costs incurred were ~ $611 million. The most expensive category of security compliance was security equipment and access control at ~ $482 million. 5.6 Funding Sources Enhanced screening of passengers and baggage after the events of 9/11 has led many airports of all sizes to incur sub- stantial capital costs. In particular, passenger screening check- points have been expanded and reconfigured. Baggage handling systems and the facilities housing them have been reconfigured as well to accommodate automated in-line screening of checked baggage. Even where in-line systems were not installed, air- ports may have incurred expenses to modify ticketing areas to accommodate free-standing bulk explosive detection sys- tem (EDS) installations. The TSA is responsible for the costs of acquiring and installing the screening equipment itself. Modification of facilities and baggage handling equipment is the responsibility of the airportâas are any incremental O&M costs (primarily electric utilities and additional law enforce- ment personnel). Since the passage of ATSA, both the FAA and TSA have administered financial assistance programs for the capital costs associated with passenger and baggage screening. In addition, airports have incurred costs to upgrade various security systems for access control, perimeter security, and monitoring functions. Also, in 2006, the CBP issued revised standards and guidance for design and implementation of CBP facilities in airports. Finally airports have incurred added personnel costs to provide enhanced security staffing and patrols and to provide for LEO presence at screening checkpoints. 5.6.1 Potential Funding Sources AIP and PFC Funding ATSA made capital development to comply with TSA secu- rity requirements eligible for AIP passenger entitlement and Requirement(s) Estimated Cost per Airport (Interquartile Mean) Estimated Industry Security Cost Airports Subject to Requirement Airports Affected by Requirement1 Industry Security Cost Security Equipment & Access Control Any other equipment or systems related to access control $1,260,000 310 68% $265,608,000 Physical access system $538,137 310 78% $130,122,000 Total costs for all equipment & access control requirements $2,235,337 310 $481,760,000 Screening Equipment & Facilities Enhanced checked baggage screening $768,055 310 29% $68,028,000 Enhanced passenger screening $637,377 310 27% $54,101,000 Customs and Border Protection $375,000 310 7% $6,920,000 Total costs for all screening requirements $129,049,000 Grand Total Security Costs $4,015,769 $610,809,000 1 Unless otherwise indicated, percentage of airports is based on Phase 1 survey results. Table 10. Summary of industry cost impacts of security requirements.
57 discretionary funds. In FY 2002 and FY 2003, AIP funding for security projects increased substantially to support recon- figuration of passenger screening checkpoints and checked baggage handling equipment and facilities. In FY 2002, the federal share of security projects was temporarily increased to 100 percent. Security projects eligible for AIP funding were also eligible for PFC funding. The airportâs local matching share or the entire amount of project costs was eligible for PFC funding. In 2003, Congress limited AIP eligibility for checked baggage screening to AIP passenger entitlement funds. However, in the same fiscal year and the years since, annual FAA appropriation legislation has prohibited use of any AIP funds for these pur- poses. The projects continue to be eligible for PFC funding. Facilities to accommodate CBP functions are considered ter- minal development and are eligible for AIP funding. At small hub airports, only passenger entitlement funds may be used for terminal development. At non-hub airports, discretionary funds may be used as well. Only limited amounts of AIP dis- cretionary funds are made available for terminal development each year. The federal share for AIP grants for terminal devel- opment at small airports was 95 percent for most of the study period. Effective in FY 2012, the federal share is 90 percent. As terminal development, CBP facilities may be funded with PFCs. PFCs can be used as the local match for AIP funds or can be used as an exclusive funding source. TSA Funding Since enactment of ATSA, the TSA has provided funds directly to airports to support installation of automated in-line checked baggage EDSs. The legal document supporting the transfer of funds is called an Other Transaction Agreement. Unlike the AIP, there is no statutorily defined federal share for TSA-funded projects. Generally, the TSA determines federal share based on an airportâs security category. For Category III and IV airports, which are usually smaller airports, the typical federal share is 95 percent. The TSA LEO support program reimburses participating airports for the cost of providing LEOs at screening check- points. The amount of reimbursement is based in part on the funds appropriated each year for this purpose, the number of airports participating and each airportâs LEO costs. 5.6.2 Use of Financial Assistance The Phase 2 survey requested information on funding sources for passenger and checked baggage screening systems and for compliance with CBP requirements. The survey did not include questions about funding sources for security and access control equipment and facilities. Passenger and Baggage Screening For passenger and baggage screening, the survey included questions on funding provided by the airport, funding pro- vided by the TSA, and funding provided by other sources. Other sources could include AIP funding, PFC funding, or state funding. Figure 31 summarizes the scope of TSA fund- ing for screening projects during the study period. The counts for passenger and baggage screening are combined. The 90-95 percent bar reflects TSA funding at a share comparable to FAA funding, which is the typical percentage received by 27 8 7 4 0 5 10 15 20 25 30 Use of TSA Funds Ai rp or ts None Less Than 90 percent 90-95 percent 100 percent Counts include airports completing both baggage and passenger screening projects Figure 31. TSA funding levels for baggage and passenger screening projects.
58 smaller airports. Figure 32 summarizes the scope of funding from other sources. Because other funding sources could have included AIP funds until 2003, the same funding levels are used. The 90â95 percent bar reflects the federal AIP share during the study period. As shown in Figure 31, a substantial majority of airports (27 out of 46) received no TSA funding. Four airports reported receiving 100 percent funding from TSA. As shown in Figure 32, a similarly large majority (28 out of 46 projects) did not receive funding from other sources. Airports that did not receive either TSA or âotherâ funding would have used their own resources to finance the projects. The survey did not include questions about the costs of providing LEO support for screening, including the extent of reimbursement. The case study airports reported that TSA participation is declining while the costs of providing LEO support are rising. CBP Facility Requirements Five airports reported initial costs of complying with CBP facility requirements. One airport used PFCs to finance the entire costs of compliance. Two airports used other airport resources to fund the full costs of compliance. Two airports relied entirely on other funding sources. The survey included a question about recurring costs of compliance with CBP facility requirements. Three airports responded. Two reported funding compliance entirely from airport resources. One airport reported CBP funded the full costs of compliance. 28 9 7 2 0 5 10 15 20 25 30 Use of Non-TSA Funds Ai rp or ts None Less Than 90 percent 90-95 percent 100 percent Counts include airports completing both baggage and passenger screening projects Figure 32. âOther sourceâ funding levels for baggage and passenger screening projects.
