Air Security Efforts Could Pinch Passengers

WASHINGTON ( TheStreet) -- President Barack Obama told Americans who was to blame for the Christmas Day air security lapse and how he intends to fix it. Consumers will figure out the cost soon enough.

Since the failed attempt to blow up Detroit-bound Northwest Airlines Flight 253, security has been tightened and Obama has called for increased intelligence sharing and analysis, and enhanced technology. The Transportation Safety Administration says 28 passengers were arrested between Dec. 27 and Jan. 3 after investigations of suspicious behavior or document fraud. There were also 24 checkpoint closures, terminal evacuations or breaches; 12 guns seized at checkpoints; and four "artfully concealed" contraband items.

A passenger in Miami who was pulled off a plane for saying "I want to kill all the Jews," a three-year-old whose Play-Doh was confiscated by the TSA in New Orleans; a lax security guard and kissing couple that shut down Newark Liberty Airport; and a German man who was detained in Stuttgart, Germany, for joking about a bomb in his underwear have each been treated with the same gravity. So who's most affected by this increased vigilance?

Airlines: Before the botched Christmas Day attack, it cost airlines $14 per flight and more than $100 million a year to transfer passenger information to the Department of Homeland Security and other authorities, according to the International Air Transport Association. With the Transportation Safety Administration implementing its Secure Flight passenger vetting system nationwide over the next few months and Washington calling for increased data sharing, that price tag may increase.

An IATA-led airline industry coalition estimates that it saved airlines $12.5 billion over 10 years by preventing the DHS from ordering airlines to collect passenger fingerprints. If biometrics become part of the government's push for next-generation security technology, the airlines can wave that money goodbye.

Abroad, the airlines alone are responsible for making other countries comply with U.S. security regulations - with potentially dire financial consequences. "When new security directives and changes come from TSA, they come out to the airlines," says IATA spokesman Steve Lott. "It's incumbent upon the airline to go to another country's government or airport and say 'we want to keep flying from your city from or to the U.S., so help us comply with these procedures.' The threat is loss of service."

Passengers: The TSA's Sept. 11 Security Fee costs passengers $2.50 for each leg of their trip before they even buy TSA-approved laptop bags or bottles of water at the airport terminal. The government plans to raise that fee incrementally by 2012. Plans for that increase came before the Christmas incident and its aftermath, when passengers lost their blankets and pillows, bathroom breaks and another half-hour to an hour on security lines. Those lines could get longer if airports add full-body scanners, which take 60 seconds to scan a passenger.

"Now that there is going to be all of this new security in place, the consumer sees it as the word 'hassle,'" says Anne Banas, executive editor of SmarterTravel.com. "There's also another group of people who do not feel safe and don't want to travel."

Government agencies: Since 9/11, airlines and passengers have paid an extra $5.9 billion a year toward air security, according to the IATA. While 20% of that funding went toward aircraft protection including reinforced cockpit doors and 38% of that went to fraud and theft prevention like the $239 million Secure Flight program and its 30-airport paperless boarding pass initiative, 27% goes toward passenger security including scanning technology.

It's one of the president's four security pillars, but it's a gamble that the TSA has lost before. In 2004, the TSA purchased 207 bomb detection devices from Smiths Detection that puffed air onto a passenger's clothing and dislodged particles to search for bomb residue. Like the full-body scanners, these devices cost $160,000 each when they were introduced in 2006, and were supposed to provide an edge against terrorists. After they became clogged by a workload they were never meant to handle, TSA pulled them last year after spending $30 million on initial costs, $6.2 million on maintenance and $1 million on removal costs instead of taking a more focused approach.

"You have to rank your risks," says John Pescatore, a former National Security Agency and Secret Service employee who is now lead security analyst for Gartner ( IT). "If we treat everything as an equal risk, we'll be aiming bazookas at mosquitoes."

Security firms: Security firms including OSI Systems ( OSIS), L-3 Communications ( LLL), ICx Technologies ( ICXT) and Smiths stand to benefit most from increased calls for and decreased privacy concerns about full-body scanners.

OSI's Rapiscan division convinced TSA to spend $25 million on 150 of its machines. TSA spokeswoman Lauren Gaches says the agency plans to buy up to 300 more of the $150,000 to $170,000 machines. The TSA is already using 40 of L-3's imagers in 19 airports. While Britain is already concerned that such machines could violate child protection laws, DeBeers is offering to make the body scanners it uses in mines available to airports and ID security companies like Intelli-Check Mobilisa ( IDN)are receiving inquiries from parties trying to anticipate terrorists' next move.

"Security is like a chess game where the bad guys have the white pieces and get to move first," Pescatore says. "However, it's not always the person with the white pieces who wins."

-- Reported by Jason Notte in Boston.
Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.

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