New terror attack could be costly for airlines

By Chris Kjelgaard

updated 4:01 p.m. ET Aug. 30, 2007

The terrorist attacks on the U.S. commercial aviation system on Sept. 11, 2001, probably cost the U.S. air travel industry and associated businesses well over $200 billion, according to researchers from the University of Southern California.

Another terrorist attack against U.S. airlines would cost the air travel industry anywhere from $214 billion to $420 billion, the USC researchers concluded in a paper entitled "The Economic Impacts of a Terrorist Attack on the U.S. Commercial Aviation System." The paper appears in the latest issue of the peer-reviewed journal Risk Analysis, published by the McLean, Va.-based Society for Risk Analysis.

In their study, which was partly funded by the Department of Homeland Security, the USC researchers modeled the effects on the U.S. economy of a seven-day shutdown of the country's air transport system after a terrorist attack, followed by a two-year period of traffic recovery.

The study hypothesized attacks using a man-portable air defense system (MANPADS, more commonly known as shoulder-launched anti-aircraft missiles) against one or more U.S. airliners within the United States.

The scientists didn't directly calculate the full economic cost to the air travel industry of the Sept. 11 attacks themselves, though they noted that "a full accounting of the economic costs has, to our knowledge, not been done."

But because they based their calculations on U.S. economic and air traffic data for the three years following the Sept. 11, 2001, aircraft hijackings, the estimated economic impact of a new terrorist attack provides a "pretty close" idea of how much the Sept. 11 attacks themselves cost the travel industry, said James Moore, one of the researchers.

"Yes, this would be a reasonable calculation of the cost of what the (travel) economy experienced after 9/11," said Moore, chair of the Daniel J. Epstein Department of Industrial and Systems Engineering at USC State Capitol Center in Sacramento, Calif.

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The researchers assumed that a new terrorist attack using shoulder-launched missiles against U.S. airliners would shut down the U.S. air transport system for seven days, but the U.S. government closed down the system for just four days after the Sept. 11 attacks.

"It is reasonable that the shutdown in this (MANPADS) type of attack would be longer because the protection against future attacks would require not only controlling who gets on planes but also a search of the areas surrounding airports and the installation of stronger protective and security services at or near airport perimeters," the scientists wrote.

However, "the length of the initial shutdown is not really a big part of the picture," said Moore. "The big cost after 9/11 was the very slow rebound of the industry, with less use of air transport industry goods and services."

In fact, wrote the USC researchers, "95 percent of the total impact of the attack is likely to occur in the post-shutdown period."

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