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DECEMBER 4, 2001 SPECIAL REPORT: SECURITY'S NEW FACE The Price of Protecting the Airways From slick data sifters to biometric analysis, businesses have lots of new proposals for making airports safer. But who'll foot the bills? Welcome to the future of air travel, a realm filled with enough high-tech gadgets to make James Bond envious. With aftershocks from September 11 still rocking the airline industry - domestic travel remains down nearly 25% from year-ago levels -- it's now almost a foregone conclusion that airline security systems around the globe are due for an overhaul. As a result, hundreds of companies are circling the tarmac with proposals for making flying far safer. They include biometrics specialists such as Visionics (VSNX ) and software makers such as HNC (HNC ). And big systems integrators such as EDS (EDS ), Accenture ACN , and PricewaterhouseCoopers have expressed interest in sewing together multilevel technology security packages for airports and airlines. Proposals on the drawing board range from using cameras to let pilots view passenger cabins to exotic wind-tunnel devices that could lift tiny particles of explosives or gunpowder off of boarding passengers to detect even the faintest hint of untoward intentions. Together, these and other initiatives could develop into a multibillion dollar market opportunity within the next few years. FERTILE INFO? It remains to be seen who would pay for all this. The newly passed Federal Aviation Security Bill permits U.S. carriers to levy a surcharge of $2.50 per trip leg, up to a $10 round-trip maximum, on every ticket. But that will go mainly to pay for a new, 28,000 person, government-run airport security corps. Meantime, airlines are so hamstrung financially they're unable to do a comprehensive security overhaul. "Airlines are spending some money, but not the kind of money it would take to do this right," say Bob Cogin, a former senior vice-president for marketing at Delta Airlines. Doing it right will involve a variety of steps, experts say. What's needed first is a more advanced passenger-screening system to evaluate the risk factor of people as they make reservations. The FAA already has such a system in place, called the Computer Assisted Passenger Precreening System (CAPPS). But Brett Ogilvie, a partner in the transportation and travel services practice at Accenture, would take the process several steps further. Like CAPPS, the new system he envisions would consider a wide variety of information that passengers voluntarily reveal when they but a ticket -- including original point of departure, method of payment, credit history, and place of residence. Unlike CAPPS, though, more comprehensive systems could, with the cooperation of foreign governments, ascertain if a passenger had lost a passport or had his or her identification stolen at some point. Such a check might have tripped up some of the September 11 terrorists, who reported their passports stolen to get clean ones showing no trace of trips to Afghanistan. DETAILED HISTORIES. Naturally, the newer systems would be more tightly wired into local and national law-enforcement databases that hold criminal records and information on potential terrorists. "CAPPS can really only check the single person who is walking out to the plane. [Accenture's] system will check your associates. Plus, it will not just go on flight data. It will ask if you have made international phone calls to Afghanistan, taken flying lessons, or purchased 1,000 pounds of fertilizer," explains Ogilivie. With coordination between airlines, both inside and outside the U.S., such systems would create detailed flight histories of suspects -- and even check for multiple aliases. Pushed to their limit, they could assemble risk profiles for each flight to spot odd confluences of passengers. "There may be 20 passengers that are just barely in the risky range, and if they are on 20 different planes you wouldn't worry about them. But put them together on the same flight, and they might be a risk," explains Ogilivie. An industrywide screening network would cost about $1 per passenger to run, Ogilivie estimates. That means $600 million for the global travel business. Initial costs at each airline could run several million dollars, plus at least $50 million to set up the central database. All told, it could cost hundreds of millions to set up such a system -- and more to operate it. "Just the data-screening portion would run over $1 billion a year," he says. PASSENGER-ELECTED I.D.s. The next step after crunching preflight data would be enhanced use of information technology in airport security systems. That could take any number of forms, many of which are already in testing today. Most palatable, for now, are passenger-elected biometric I.D.s, using data such as fingerprints and retinal scans, that can expedite their clearance through security checkpoints. At Ben Gurion Airport in Israel, passengers can pay a $20 annual fee and submit to a government background check that will allow them to use a biometric I.D. for air travel. In exchange, they gain entry to a fast-track line that cuts the amount of time they must wait to clear passport control from two hours to perhaps 20 seconds, according to EDS, which installed the system. "With the opt-in biometric systems, we see an opportunity for a revenue source for the airlines," says Brett Kidd, vice-president for strategy at EDS's transportation group. "We feel most frequent fliers would be willing to pay for the expedited service." Crews and airport workers are another likely target for biometric security devices. San Francisco International Airport already uses a biometric fingerprint reader built by Identix (IDNX ) to screen potential hires against databases of known felons. And airport employees have to be approved by biometric hand-geometry scanners installed by Ingersoll-Rand (IR ) to gain access to restricted areas. Such a system has a twofold benefit: Aside from keeping nonemployees out, biometric scanners can audit the comings and goings of employees and lessen the likelihood of an inside terrorist job. EXOTIC TECH. Unfortunately, biometric technologies remain expensive. Kiosks that incorporate a variety of biometric input types cost tens of thousands of dollars, and the price tag for a complete rollout at a major airport would likely range from the hundreds of thousands to the millions. The tally worldwide could run into the hundreds of millions. Slow adoption seems likely, and the International Biometrics Industry Assn. forecasts that the worldwide market for these technologies will hit only $300 million in annual sales by 2003. Beyond biometrics lie technologies that are far more exotic - and stratospherically expensive. Recent innovations include microwave scanners that can tell if the liquid contents of a bottle are flammable, potent X-ray machines that can even spot hard plastics woven into clothing, and CAT-scan devices that provide a 3-D image of baggage contents. Barely out of development, these complex machines cost $100,000 and up. That means many airports simply couldn't afford to deploy more than a few of them right now and possibly will never be able to afford them on a wide-ranging basis. In fact, many airports are struggling to find the cash to pay for the explosive-detection machines, costing $1 million apiece, mandated by the U. S. Transportation Dept. Many airlines and consultants are now starting to think about locking down peripheral areas beyond passenger corridors, as well. "What hasn't received much attention is the perimeter around the tarmac or the access by employees and nonemployees to secure areas," explains Martin Roenigk, CEO of security-technology company CompuDyne (CDCY ), which makes everything from integrated surveillance systems to blast-proof doors. According to Roenigk, airports simply haven't given much thought to physical barriers. "The doors you find there are the same kind of doors you might find on the back of a supermarket," he says. MANIPULATING THE SYSTEM? That may change soon. CompuDyne has received a huge bump in inquiries, not from traditional sources such as embassies and military bases, but from new customers in the private sector. In response, the company is ramping up production for some of its physical-security products by 40%. And on Nov. 26, CompuDyne rolled out an integrated security offering for airports that includes everything from optical sensors to protect airport perimeters to video-surveillance systems that track employee movements from one building to the next. The cost per airport? Roenigk puts it in the millions of dollars. Getting all of these systems up and running will clearly cost more than anyone is willing to pay right now. The more intrusive technologies, such as biometrics and exhaustive passenger screening, also worry civil libertarians. And many security experts have said these technologies won't screen out savvy terrorists. To the contrary, a terrorist could gain a more foolproof way to carry out mischief by finding a way to manipulate the system. Most difficult of all might be getting the airlines to coordinate on such an overarching data system -- among themselves and with major electronic-reservations companies such as Sabre and Worldspan. Carriers now agree on transferring baggage and forming frequent-flier alliances -- but not on much else. FINDING A WAY. So far, airlines have snapped to only when confronted with a government mandate. Since September 11, reinforced cockpit doors have been installed, at a cost of $10,000 and up per plane. But building larger, networked security systems will require more cooperation with the government -- and with each other. According to EDS's Kidd, who has been attending Homeland Security Dept. meetings on the topic, the consensus is that the Bush Administration will find a way to pay for many of these enhancements. With Congress willing to throw billions at military weapons and security -- and the public exerting intense pressure to make flying safer -- EDS, Compudyne, Accenture, and many others could end up making big bucks protecting both planes and airports.  By Alex Salkever, BusinessWeek Online's Technology editor, with John Cady in New York Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | DECEMBER |
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