Terror Attack Could Cost U.S. Commercial Aviation $420B

MCLEAN, Va.--Aug. 21, 2007--Based on the scenario thought most likely, another attack on U.S. commercial aviation could cost as much as $420 billion, according to a new study appearing in the current issue of the scientific journal Risk Analysis. The authors conducted their research on the basis that the attack would shut the entire system down for seven days and require a two-year recovery period.

"The Economic Impacts of a Terrorist Attack on the U.S. Commercial Aviation System" by four scientists at the University of Southern California Center for Risk and Economic Analysis of Terrorism Events appears in a special homeland security issue of the peer-reviewed journal (Vol. 27, No. 3, 2007), which is published by the McLean-based Society for Risk Analysis (www.sra.org). As the sixth anniversary of Sept. 11, 2001, approaches, the conclusions from this study should help commercial aviation authorities with their emergency planning.

Peter Gordon, James E. Moore II, Ji Young Park and Harry W. Richardson used a careful, conservative analysis of the after-effects of September 11 to model a single attack on a major airport, causing an initial shut-down of the entire U.S. commercial air transport system followed by a recovery period. Their key findings are:

-- An initial seven-day shutdown would be three days longer than the shutdown after 9/11 because protection against future attacks would require not only controlling who gets on planes, but also a search of areas surrounding airports and installation of stronger protective and security services at or near airport perimeters.

-- This seven-day shutdown would cost $12.5 to $21.3 billion, including airline tickets, ground transportation, accommodations, food, gifts/shopping and amusements, as well as all air freight (20 percent of total air revenues).

-- After operation resumes, commercial aviation would take two years to recover. Air freight transport would proceed normally, but passenger travel would be diminished due to psychological aftereffects of the attack.

-- Overall loss estimates for the two years range from $214 to $420 billion.

-- These loss estimates capture the economic consequences that would follow an attack, but exclude the costs associated with the loss of life and the replacement cost of aircraft that would be incurred as the result of an attack.

"We assume a single attack on a major airport; we believe that this would shut down the whole system with little difference in impact than if several airports were attacked simultaneously...," the authors said in Risk Analysis. "These estimates...suggest that the high costs of effective countermeasures may be justified."

This research was supported by a grant from the U.S. Department of Homeland Security.