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

42 Pages Posted: 23 Oct 2007  

Garrick Blalock

Cornell University - School of Applied Economics and Management

Vrinda Kadiyali

Cornell University - Samuel Curtis Johnson Graduate School of Management

Daniel H. Simon

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

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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 Classification: L50, L93, H56

Suggested Citation

Blalock, Garrick and Kadiyali, Vrinda and Simon, Daniel H., The Impact of Post 9/11 Airport Security Measures on the Demand for Air Travel. Journal of Law and Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1007534 or http://dx.doi.org/10.2139/ssrn.677563

Garrick Blalock

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

Vrinda Kadiyali

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States
607-255-1985 (Phone)
607-254-4590 (Fax)

Daniel H. Simon (Contact Author)

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

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