Missile Attacks on Airliners Could Hurt U.S. More than 9/11

Terroristattacks against U.S. airliners using portable anti-aircraft missiles could hurtthe U.S. travel industry even more than did the Sept. 11, 2001 attacks,according to researchers from the University of Southern California.

The hijackingsof the four airliners on Sept. 11, 2001 probably cost the U.S. air travel industry and associated businesses well over $200 billion, said James Moore, chairof the Daniel J. Epstein Department of Industrial and Systems Engineering at USC State Capitol Center, Sacramento.

But anotherterrorist attack against U.S. airlines would cost the air travel industry anywherefrom $214 billion to $420 billion, the USC researchers concluded in a paper appearingin the new issue (Volume 27, number 3) of the peer-reviewed journal RiskAnalysis, published by the McLean, Va.-based Society for Risk Analysis.

In theirstudy, which was partly funded by the Department of Homeland Security, the USC researchersmodeled the effects on the U.S. economy of a seven-day shutdown of the country'sair transport system after a terrorist attack, followed by a two-year period oftraffic recovery.

The studyhypothesized attacks using a man-portable air defense system (MANPADS, morecommonly known as shoulder-launched anti-aircraft missiles) against one or moreU.S. airliners within the United States.

Moore andthe other researchers didn't directly calculate the full economic cost to the airtravel industry of the Sept. 11 attacks themselves, though they noted that"a full accounting of the economic costs has, to our knowledge, not beendone."

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

"Yes,this would be a reasonable calculation of the cost of what the (travel) economyexperienced after 9/11," he said.

Theresearchers assumed that a new terrorist attack using shoulder-launchedmissiles against U.S. airliners would shut down the U.S. air transport systemfor seven days, but the U.S. government closed down the system for just fourdays after the Sept. 11 attacks.

"It isreasonable that the shutdown in this (MANPADS) type of attack would be longerbecause the protection against future attacks would require not onlycontrolling who gets on planes but also a search of the areas surrounding airports and theinstallation of stronger protective and security services at or near airportperimeters," the scientists wrote.

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

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

Over twoyears, the direct loss in revenues to the U.S. airline business of a newterrorist attack would be $43.65 billion, the researchers calculated. This isvery close to the total net loss that the Air Transport Association (ATA)estimated the U.S, airline industry incurred in the 2001-2005 period, beforethe industry returned to profitability in 2006 -- though Moore said the USCscientists did not use the ATA estimate in performing their calculations.

Theirlost-revenue estimate assumes that transport of air freight would return tonormal immediately after the seven-day shutdown, but that passenger trafficwould take two years to return to pre-attack levels, as happened after 9/11. They estimated the average cost of adomestic ticket at $325, and of an international ticket $667.

But theeconomic impacts go much deeper. The airline industry uses goods and servicesfrom other business sectors. This demand for goods and services from airlines stimulatesthese businesses' own use of the air transport system, said Moore.

Additionally, U.S. businesses need to use the air transport system in many other ways tostimulate their growth. "There's a web of relationships," and thesecreate multiplying effects economically, he said.

One industrythat the USC researchers thought would do well during a post-terrorism U.S. airline reversal is telecommunications, which they estimated would see as much as$19.5 billion in extra revenue in the two years following an attack.

Yet theestimate of an overall negative impact of $214 billion to $420 billion might beconservative. If the U.S. public took longer than two years to become aswilling to travel by air as it had been before the attack, "losses wouldmount up and this could damage the (airline) industry," perhapsirrevocably, said Moore.

"Supposethe traveling public was skeptical that the government could not guarantee thesafety of air travel. I would imagine it would be destructive for theindustry," he said. "I think everyone understands the industry is insome ways very fragile financially."

Equippingthe entire U.S airliner fleet with countermeasures against portableanti-aircraft missiles would cost anywhere from $10 billion to $100 billion,the USC researchers estimated. The actual equipment cost would be $10 billionto $20 billion, but since "some countermeasures deteriorate quickly andmust be replaced frequently," continuing costs could total an additional$5 billion to $10 billion annually.

Butequipping the U.S. fleet with anti-missile countermeasures might well be worth thecost, they concluded. "It appears that the deployment of countermeasuresis justified for a wide range of attack probabilities, such as 0.25 over afive-year period," the scientists wrote.

The 9/11terrorist offensive "was a very expensive event" for the United States, said Moore. But "it is possible for events to happen that are even moreexpensive. It's in everybody's interest to avoid impacts (from terroristattacks). The entire exercise was intended to focus on, what costs do we avoid,and what do we have to lay out?"