The European Commission released a report last week looking at the financing of transportation security (both aviation and maritime), following up to two earlier reports on the topic from 2004 and 2005. The report probes the question of who funds aviation security in Europe:
As regards security expenditure the study revealed that in 2002, prior to the entry into force of the European regulations, total security related expenditure for the 18 states was between 2.5 and 3.6 billon euros. This is made up of 0,65 billion euros by the states, 1,32 billion euros by airports and between 0,52 and 1,66 billion euros by air carriers. Although one may argue that these costs are significant, the study showed that for example for intra-European travel, the combination of security taxes and airport charges represents between 1% and 2% of the average fare.
….The study concluded that in both models the passenger was, ultimately, the main funder of security through State security taxes, airline security charges on tickets and/or airport charges. However, it also concluded that in the majority of countries and, irrespective of the model applied, funding from passengers during the year 2002 was insufficient to cover all security costs.
This funding model is then compared with the American aviation security system:
In the aftermath of 11 September 2001, the US authorities granted significant financial assistance to its hard-hit aviation industry and ensured nationwide application of several major security measures. As an example, the US aviation industry from 2002 to 2004 benefited from public assistance amounting to almost 32000 million euro under the header of transport security. It is clear that such heavy public funding can create distortions of competition between European and American carriers.
The report then looks at whether such security financing by governments constitutes State aid (generally illegal) under EU law, and finds that it doesn’t, based on precedent, and reaffirms that EU member states have a role in funding aviation security. This statement was cheered by the aviation industry after the release of the report, prompting a call for a “a speedy harmonization of the funding of security systems.”