LONDON, June 13 -- The European airport security market looks set for robust growth, particularly in the wake of continued terrorist threats, new European Union (EU) airport security regulations, rising passenger traffic and the increasing need to upgrade installed security equipment, as well as integrate this with newly implemented technology. Opportunities are particularly lucrative in the biometrics and explosive detection sub-segments, where small start-up companies offering innovative technologies can expect favourable financial backing from venture capitalist firms.
New analysis from Frost & Sullivan (http://www.financialservices.frost.com), European Airport Security Equipment Market: Investment Opportunities, reveals that this market earned revenues (top 47 participants) of US$2.37 billion in 2005 and estimates this to reach US$10.35 billion in 2010.
"While there are over 491 airports in Europe as of March 2006, another five to six airports are currently under construction with a plan for twenty other airports to be upgraded," notes Frost & Sullivan Financial Analyst Rani Cleetez. "In addition, the privatisation of certain European airports will necessitate better security equipment, in order to meet the latest international security standards, as well as to ensure world class airport status."
In addition, EU legislation aimed at imposing standard security requirements across all member states is likely to heighten demand for airport security equipment. The European Commission moved to pass legislation in 2005 to bring simplification, harmonisation and clarification of existing rules in order to improve levels of security in the civil aviation industry across the EU. This refined existing measures contained in the 2002 regulation. This in turn led the EU to pass the legislation aimed at imposing standard security requirements across all member states.
The above initiative is likely to increase demand for more advanced security technologies, including biometrics and advanced scanning technologies.
These positive trends aside, the sluggish response from the EU and individual governments when it comes to prioritising airport security has resulted in low purchase rates for airport security equipment. The high costs associated with the purchase of airport security equipment also remain a major barrier to the faster adoption of this increasingly essential equipment.
"However, this is all likely to change with the increased government budgets available for the countries looking at entering the EU," says Cleetez. "The EU's decision to standardise airport security measures across member countries is also expected to go a long way towards alleviating these concerns."
Going forward, the biometrics sub-segment is likely to witness explosive growth. This is particularly likely given the renewed push by European authorities to study measures similar to the United States' fledgling Registered Traveller program, after they uncovered an alleged plot to blow up passenger jets en route to the United States. Concrete decisions regarding deployment are due in latter part of 2007 or in 2008, meaning this market presents robust potential opportunities for venture capital investors.