The Impact of Post 9/11 Airport Security Measures on the Demand for Air Travel

Abstract:     
We examine the impact of post-9/11 airport security measures on air travel in the U.S. Using five years of data on passenger volume, we evaluate the effects of the implementation of baggage screening and the federalization of passenger screening on the demand for air travel. These two congressionally mandated measures are the most visible changes in airport security following the 9/11 attacks. Exploiting the phased introduction of security measures across airports, we find that baggage screening reduced passenger volume by about five percent on all flights, and by about eight percent on flights departing from the nations fifty busiest airports. In contrast, federalizing passenger screening had little effect on passenger volume. We provide evidence that the reduction in demand was an unintended consequence of baggage screening and not the result of contemporaneous price changes, airport-specific shocks, or other factors. Moreover, this decline in air travel has substantial welfare implications. Back-of-the-envelope calculations indicate that the airline industry lost about $1.1 billion, a tenth of the projected revenue lost because of 9/11 itself. Similar calculations show that the substitution of driving for flying by those seeking to avoid security inconvenience likely lead to over 100 road fatalities.

Keywords: air travel, terrorism, security

JEL Classifications: L50, L93, H56

Accepted Paper Series