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Airport Security
Are Advanced Technology Deployments Enough to Grow the Market?
David Fishering, Industry Analyst
Aerospace & Defense
August 28th, 2008
2
Agenda
• Market Definitions
• Market Forecasts
• Market Drivers and Restraints
• Market Trends
• Market Challenges
• Technology Roadmap
• Competitive Environment
• Market Attractiveness
• Frost & Sullivan Info
3
Market Definitions
Checked Baggage
• Predominately
explosives detection
systems using CT
technology
• Baggage screening
includes legacy X-ray
and AT X-ray systems
• Desktop/handheld
explosives trace
detection are also
included in this segment
Cargo Screening
• X-ray, CT, or trace
systems that can scan
individual packages as
well as palletized cargo
• Systems that identify
substances or
contraband on an
individual
• Technologies include
mm-Wave imaging, Z-
Backscatter, trace portals
and metal detectors
Checkpoint (Passenger)Checkpoint (Carry-On)
AIRPORT
SCREENING
4
Summary of Key Findings
69.1%
26.0%
4.9%
0.0
100.0
200.0
300.0
400.0
500.0
600.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Year
Sp
en
din
g (
$ M
illi
on
)
Checked
Baggage
Carry-on Baggage
Passenger
Screening
Airport Screening Markets: Spending Forecast by Segment (U.S.), FY 2007-2012
FY 2007-2012
FY 2007 FY 2012
2.2%
17.2%
80.6%
6.4%
32.7%
60.9%
Note: All figures are rounded. Source: Frost & Sullivan
5
Summary of Key Findings
52.3%
47.7%
0.0
100.0
200.0
300.0
400.0
500.0
600.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Year
Sp
en
din
g (
$ M
illi
on
)
Equipment Procurement Services
57.1%
42.9%
50.9%
49.1%
Note: All figures are rounded. Source: Frost & SullivanFY 2007-2012
FY 2007 FY 2012
Airport Screening Markets: Spending Forecast for Equipment and Services (U.S.), FY 2007-2012
6
Market Drivers and RestraintsR
estr
ain
tsD
rivers
Strong
Weak
High threat
perception
continues to
drive security
spending
Length of Arrow indicates relative impact
Existing
technology
deployment is
reaching capacity
The demand for
more efficient
systems drives
growth
TSA’s layered
security approach
continues to
provide
opportunities for
new technologies
DHS pilots rarely
lead to mass
deployment
The reactionary
nature of the
airport security
market continues
to create
opportunities
TSA is focusing
on secondary
screening
technologies
Security spending
is being siphoned
away from
technology
Weak
Strong
7
Industry Trends
Data and alarms from sensors are
analyzed at each station
independently
Sensors communicate findings to
each other providing a holistic view
of the threat prior to an alarm
FY 2007-2008 FY 2009-2010 FY 2010-2012
IntegrationSensor Fusion/
Interoperability
Source: Frost & Sullivan
8
Challenges
Airport Screening Market: TSA Budget Breakdown (U.S.), FY 2008
52.4%
3.6% 18.6%2.9%
4.5%
5.0%
1.5%
11.6%
EDS/ETD Checkpoint
Air Cargo Training
Screener Compensation Privatized Screening Airports
HR Services Aviation Direction and Enforcement
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
Sp
en
din
g (
$ M
illio
n)
Air Cargo 55.0 73.0 122.8 221.0 265.2 278.5
Checkpoint 173.4 250.0 200.0 200.0 200.0 200.0
EDS/ETD 524.4 583.0 621.1 646.6 668.6 685.3
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 20120.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
Sp
en
din
g (
$ M
illio
n)
Budget 997.3 1129.8 1141.2 1257.0 1319.4 1353.1
Spending 453.6 408.0 425.2 478.1 506.3 542.5
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Airport Screening Market: TSA Budget vs. Spending (U.S.), FY 2007-2012Airport Screening Market: TSA Screening Budget (U.S.), FY 2007-2012
Screening Budget
Note: All figures are rounded. Source: Frost & Sullivan
Note: All figures are rounded. Source: Frost & Sullivan
Note: All figures are rounded. Source: Frost & Sullivan
9
Challenges - TSA’s Layers of Security
• TSA’s “Layers of Security” concept
has provided opportunities for
multiple technologies – there is no
silver bullet
• However, this approach has also
limited real growth because it is
human heavy
Intelligence
Customs and Border Protection
Joint Terrorism task Force
No Fly List and Passenger Screening
Crew Vetting
VIPR
Canines
Behavior Detection Officers
Travel Document Checker
Checkpoint/TSOs
Checked Baggage
Transportation Security Inspectors
Random Employee Screening
Bomb Appraisal Officers
Federal Air Marshal Service
Federal Flight Deck Officers
Trained Flight Crew
Law Enforcement Officers
Hardened Cockpit Doors
Passengers
Terrorist Paths
Source: TSA
10
Challenges - TSA’s Air Cargo Efforts
• There is currently no focus on
the deployment of technology for
screening air cargo, according to
TSA
• Without the support from TSA
technology deployment is
unlikely to happen by the 2010
deadline
Source: TSA
11
Challenges - The Future of Air Cargo
• The near-term focus is going to
be on deploying more
inspectors and canine teams
• Without a clear plan on what
technology to employ and more
importantly how to employ it,
the likelihood of a technology
based solution for air cargo is
unlikely
12
TSA’s Technology Deployment Plans
13
Technology and Solution Roadmap
2007 2008 2009 2010 2011 2012
X-Ray
Trace Portal
Backscatter
Passive Millimeter Wave/Terahertz Imaging
Computed Tomography (CT)
Active Millimeter Wave
Metal Detection
Advanced Technology (AT) X-ray
Checked
Baggage
Checkpoint
Security
Air Cargo
AT X-Ray
Trace Detection
X-Ray
AT X-Ray
CT
Sensor Fusion and Interoperability
Trace Detection
Canine/Authorized Shipper
Tech TrendSource: Frost & Sullivan
14
Competitive Environment
GE Homeland
Protection
52.7%
L-3 Security
and Detection
22.9%
Other
3.8%
Smiths
Detection
9.7%
Reveal
Imaging
8.8%
Rapiscan
2.2%
Airport Screening Markets: Market Share (U.S.), 2007
15
Market Attractiveness GridR
even
ue
Att
racti
ven
ess
High
Low
Significant Barriers
Open
Market
Market Openness
Most Attractive Markets
Most Attractive
Attractive
Least Attractive
20122012
20122012
Carry-On Screening
Carry-On Screening
Checked Baggage
Checked Baggage
20122012
Implementation Decisions
in favor of Screening
Technology
Air Cargo Security??
Air Cargo Security??
Decision postponement
or a non-tech solution
such as Canine teams Passenger Screening
Passenger Screening
20122012
20122012
Source: Frost & Sullivan
16
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17
Aerospace & Defense Market Coverage
C4ISR
Unmanned Systems
Homeland Security
Commercial Aerospace
Training and Simulation
18
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