June 20, 2018 / 4:28 PM / in a month

European airports face 15 billion euros in extra security costs

BRUSSELS (Reuters) - European airports are facing mounting security costs, adding to pressure from dwindling commercial revenues, rising interest rates and reluctance among airlines to pay more fees, an industry association said.

ACI Europe predicts European airports will need to invest 15 billion euros ($17 billion) by 2022 to meet new EU requirements on screening hold baggage.

“Before 9/11, airports spent about 5 percent of their costs on security, now it’s 20 percent. We’ve been transformed into big security companies,” Olivier Jankovec, director general of ACI Europe, told Reuters.

In the United States, the government pays for security at airports, but in Europe it is mostly up to the airports and Jankovec said he didn’t expect governments to step in and help foot the bill.

“We keep talking about it but we don’t see any opening,” he said. Jankovec also urged more cooperation between governments on intelligence and data sharing and said security resources should be focused on tracking the people who posed a possible threat, rather than subjecting all passengers to the same checks.

While the industry’s return on invested capital (ROIC) now stands at 8.5 percent, up from 5.1 percent in 2011, commercial revenues per passenger such as from retail, food and beverage, and parking have dropped by 4.8 percent since 2011, partly due to the rise of low-cost travel and also online shopping competing with airport retailers.

Airports such as Vienna (VIEV.VI) and Frankfurt (FRAG.DE) are two such airports currently grappling with the problem of rising traffic but stuttering retail spending by passengers as they follow rival airports and open up to low-cost carriers.

Jankovec said airlines offering fewer frills and less leg-room, with economy passengers often having to buy their own food and drink for example, could offer airports a chance to sell themselves as a haven where passengers could de-stress before the flight.

“I think that gives an opportunity to the airport to be the place as part of the travel experience where the passenger can have a really good time, to recharge, relax and then go on the flight,” he said.

($1 = 0.8631 euros)

Reporting by Victoria Bryan; Editing by Mark Potter

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