Report from the Commission on financing aviation security
Date: 2009-02-02
Institutions: European Commission
Subjects: air safety, air transport, airport, financing, transport infrastructure

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 2.2.2009 
COM(2009) 30 final 

REPORT FROM THE COMMISSION 

on financing aviation security 

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REPORT FROM THE COMMISSION 

on financing aviation security 

INTRODUCTION 

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The  terrorist  attacks  of  11  September  2001  in  the  United  States  had  a  profound 
impact  on  the  global  aviation  sector  as  well  as  on  the  European  aviation  sector. 
Strong measures were essential to address the threats posed by international terrorism 
and to restore public confidence in the aviation sector. The European Union therefore 
took immediate steps to adopt new rules on aviation security.  

These  new  rules  on  aviation  security  obliged  Member  States  to  introduce  new 
measures  that  inevitably  meant  making  significant  investments  in  infrastructure, 
technical  equipment  and  human  resources  at  most  European  airports.  The  need  for 
increased  security  controls  also  affected  airport  operations.  According  to  ACI-
Europe,  security  costs  now  represent  up  to  35%  of  overall  airport  operating  costs 
instead of 5% to 8% prior to the events of September 2001. 

Consequently, the financing of these new measures is again on the policy agenda of 
the  European  Union,  as  confirmed  by  Article  22  of  the  new  framework  Regulation 
(EC) No 300/2008.  

Following the adoption on 11 March 2008 of the revised framework Regulation (EC) 
No  300/2008  on  aviation  security,  the  Commission  is  obliged  to  report  on  the 
principles  of  financing  the  costs  of  civil  aviation  security  measures.  This 
Commission  report  sets  out  to  comply  with  this  requirement  and  to  prepare  policy 
conclusions on this important matter.  

The  report  addresses  four  issues:  whether  security  charges  are  exclusively  used  to 
meet  security  costs,  the  transparency  of  security  charges,  the  impact  of  aviation 
security and its financing on competition between airports and between airlines, and 
consumer  protection  as  regards  the  distribution  of  the  costs  of  security  measures 
between taxpayers and users. 

To  prepare  the  report,  the  Commission  sent  a  questionnaire  to  Member  States, 
representatives  from  industry  and  consumer  organisations.  The  questionnaire  asked 
Member  States  whether  existing  national  legislation  ensured  transparency  and  that 
security  levies  are  used  to  exclusively  to  meet  security  costs.  5  Member  States 
replied  that  existing  airport  charges  consultations  provide  airlines  with  sufficient 
information  on  security  costs  as  well.  Similarly  for  cost-relatedness  of  security 
levies,  11  Member  States  replied  that  the  same  consultations  ensure  that  security 
levies are used to exclusively to meet security costs. However, these consultations do 
not require the approval of the operators to modify security levies and do therefore 
not  ensure  transparency  and  cost-relatedness.  Actually,  only  the  Netherlands  have 
specific legislation in force requiring security levies to be both transparent and cost-
related.  The  Italian  legislation,  which  is  the  other  national  legislation  targeting 
security  levies,  only  ensures  transparency.  The  replies  also  confirmed  that  aviation 
security  is  mainly  financed  through  security  levies  on  airlines,  air  passengers  and 

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7. 

cargo  shippers.  This  is  usually  referred  to  the  "user-pays"  principle.  11  Member 
States  rely  almost  entirely  on  such  levies.  6  Member  States  sometimes  make 
significant contributions to the security costs. 4 Member States did not reply or did 
not  reply  in  sufficient  detail  for  the  Commission  to  draw  any  conclusions  on  their 
replies. 

Organisations  representing  airlines,  airports  and  consumers  were  asked  to  provide 
information  on  the  cost  and  impact  of  aviation  security.  9  organisations,  mainly 
airport and airline organisations, replied and they all argued that States should cover 
for security costs because the threats are targeted against States and not against the 
industry. Unfortunately, only one consumer organisation replied to the questionnaire. 
Several replies argued that aviation is at a disadvantage in comparison with financing 
security in other transport modes and that this negatively impacts the competitiveness 
of  the  European  aviation  sector.  All  stakeholder  replies  endorsed  increased 
cooperation within the International Civil Aviation Organization (ICAO) as the best 
international  aviation  security  measures  and  address 
solution 
differences in the level of state-funding between the EU and its main trade partners.  

to  harmonise 

BACKGROUND 

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The main cost for aviation security is airport security services to screen passengers 
and  cargo,  which  usually  has  two  main  components:  staff  costs  and  costs  for 
infrastructure and equipment. 

As aviation security is a core state responsibility, national authorities are ultimately 
responsible for these services. National authorities can either provide these services 
themselves or delegate them to the airport, which may subcontract some of the tasks 
to security contractors. 

To finance airport security services, the airport or the national authorities can levy a 
tax,  a  fee  or  a  charge  on  airlines,  passengers  and  cargo  shippers.  However,  these 
levies usually do not cover the costs of measures imposed directly on airlines or the 
additional  operational  costs  these  measures  may  cause  for  airlines.  Some  costs  of 
aviation security are also borne by the Member States. 

Following  the  implementation  of  new  European  rules  in  2002,  the  overall  cost  of 
aviation security increased. Significant new investments were necessary, such as the 
refurbishment  of  some  airport  terminals,  the  acquisition  of  additional  screening 
equipment and the recruitment of additional staff to meet the increased requirements 
on security controls of passengers and cargo. 

Before  2001  security  costs  were  often  a  component  of  the  passenger  charge  that 
airports levy to cover the cost of terminals. When airports consulted with airlines on 
airport  charges,  security  charges  were  therefore  also  discussed.  Security  costs  were 
previously a negligible part of total airline cost and airlines did therefore not insist on 
more information on these costs. However, with  increased security costs  in 2002 it 
became more common to separate security levies from airport charges. A separation 
also  allowed  the  air  transport  industry  to  focus  the  attention  of  its  customers  on 
security costs. 

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Separating  security  levies  from  airport  charges  did  not  significantly  increase 
transparency  of  security  costs.  Replies  to  the  questionnaire  confirmed  that  security 
costs are passed on to cargo shippers and air passengers, with no possibility for them 
to  assess  whether  the  correct  amount  is  levied.  One  reply  pointed  out  that  airline 
customers may be charged for additional services that are not mandatory. Actually, a 
customer  may  even  disagree  with  the  airline  that  the  security  levy  recovers  the 
relevant cost. 

The rise in costs fuelled a discussion on financing aviation security. The air transport 
industry has argued since then that the share of public financing of aviation should 
increase  as  these  measures  generally  aim  to  protect  against  attacks  on  society  as  a 
whole and not the aviation industry and its customers.  

The  European  Parliament  used  similar  arguments  during  the  discussions  with  the 
Council  on  the  first  framework  Regulation  (EC)  No  2320/2002  on  civil  aviation 
security.  The  European  Parliament  wanted  to  prevent  the  whole  cost  of  increased 
aviation security being imposed on air passengers, cargo shippers and airlines. 

The  European  Parliament,  the  Council  and  the  European  Commission  therefore 
agreed to address the issue of financing in a declaration attached to the decision on 
Regulation (EC) No 2320/20021. In the declaration, the three institutions recognised 
that new aviation security measures raise important issues on financing and asked for 
further  analyses  to  identify  differences  existing  in  the  Community  in  financing 
aviation security and solutions to any potential distortions to the aviation market. 

External  consultants  were  commissioned  to  analyse  the  issues  raised  in  the  inter-
institutional declaration. The consultants analysed the situation in 2002 and the study 
was  published  in  2004.2  The  study  was  mainly  based  on  analysis  of  replies  to 
questionnaires sent to Member States and industry. The findings of the study can be 
summarised as follows: 

–  The  users  of  the  European  air  transport  system  (airlines,  air  passengers,  cargo 

shippers) are ultimately the main funder of aviation security. 

–  The security costs for airports and States in 2002 for the then 15 Member States 
and Norway, Iceland and Switzerland were estimated at €2 billion. Including the 
costs to the airlines to comply with new European rules, total security costs were 
estimated  to €2.6 to  3.5  billion, which  at that time corresponded to between 1% 
and 2% of an average air fare. 

–  The  consultants  did  not  find  sufficient  evidence  to  conclude  that  the  increase  in 
security  charges  reduced  the  demand  for  air  travel.  Although,  the  data  available 
were insufficient to produce a solid economic analysis.  

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2 

Interinstitutional Declaration accompanying Regulation (EC) No 2320/2002 of the European Parliament 
and  of  the  Council  of  16  December  2002  establishing  common  rules  in  the  field  of  civil  aviation 
security (OJ L 355 of 30.12.2002, p. 22). 
Study  on  Civil  Aviation  Security  Financing,  September  2004,  Irish  Aviation  Authority  and 
aviasolutions. 

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18. 

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During  the  conciliation  process  on  the  new  framework  Regulation  (EC)  No 
300/2008, the European Parliament reiterated its position on financing security. The 
Council  and  the  European  Parliament  discussed  the  financial  impact  of  more 
stringent  measures  imposed  by  some  Member  States  that  go  beyond  the  minimum 
requirements.  Article  6  of  Framework  Regulation  (EC)  No  2320/2002  provides  for 
this.  The  European  Parliament  argued  in  particular  that  Member  States  should  pay 
the  costs  of  more  stringent  measures  exceeding  EU  requirements  from  public 
budgets,  at  least  in  part.  The  Council,  however,  rejected  this  request  for  Member 
States to commit themselves to increased public financing for aviation security. 

The Commission had already proposed establishing new European rules for levying 
security  charges.  The  proposal  for  a  Directive  on  airport  charges,  which  was 
presented  on  24  January  2007,  addressed  financing  airport  infrastructure  in  general 
and  contained  a  provision  on  security  charges.3  The  proposal  was  based  on 
internationally  accepted  principles  already  endorsed  by  the  International  Civil 
Aviation Organization (ICAO).4 However, the Council preferred to await this report 
before considering new EU legislation on the provision of security charges. 

SECURITY CHARGES AND COSTS 

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The first of the four issues in this report concerns the steps to be taken to ensure that 
security charges are used exclusively to meet security costs. This is an internationally 
accepted principle endorsed by the ICAO.5 

In general, a charge, unlike a tax, is levied in return for a service provided to the user. 
The  level  of  the  charge  should  therefore  correspond  to  the  cost  of  providing  this 
service. In the same way, revenues from security charges should only cover the total 
cost of aviation security services. 

This principle is supported by EU rules on State aid. In the 2006 report on financing 
transport  security,  the  Commission  clarified  that  measures  to  protect  European 
citizens  against  terrorist  attacks  are  not  primarily  an  economic  activity  as  they  are 
essentially  a  state  responsibility.6  Public  financing  of  such  measures  therefore  does 
not fall within the scope of the rules on State aid.7 However this does not mean that 
Member States should cover all costs of aviation security. 

Financing  aviation  security  activities,  be  it  through  public  financing  or  through 
charges levied on the users, must therefore be strictly limited to compensating for the 
costs to which they give rise.8 Any overcompensation for aviation security services 
falls within the scope of the rules on State aid as it could constitute operating aid to 
the recipient.  

COM(2006) 820 final of 24.1.2007. 
ICAO’s Policies on Charges for Airports and Air Navigation Services (Doc 9082/7), 2004, point 15. 
ICAO’s Policies on Charges for Airports and Air Navigation Services (Doc 9082/7), 2004, point 29. 
COM(2006) 431 final of 1.8.2006. 
See para.33, Community guidelines on financing of airports and start-up aid to airlines departing from 
regional airports, (OJ C 312 of 9.12.2005). 
See Case C-343/95 Calì & Figli v Servizi ecologici porto di Genova [1997] ECR I-1547. Commission 
Decision  N  309/2002  of  19  March  2003,  Aviation  security  —  compensation  for  costs  incurred 
following  the  attacks  of  11  September  2001.  Commission  Decision  N  438/2002  of  16  October  2002, 
Aid in support of public authority functions in the port sector. 

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24. 

25. 

The  replies  to  the  questionnaire  confirmed  that  only  very  few  Member  States  have 
legislation  in  force  explicitly  prohibiting  windfall  profits  in  conjunction  with  the 
mandatory imposition of security levies. Other Member States referred to legislation 
stipulating  that  security  charges  must  be  based  on  the  actual  cost  of  providing  the 
service, which would imply that the level of security charges cannot exceed the cost 
of  security  measures.  In  some  Member  States  security  charges  are  approved  by 
competent authorities before they enter into force. 

Even  though  the  replies  to  the  questionnaire  confirmed  a  general  consensus  that 
security charges should reflect security costs, the Commission is not convinced that 
this  principle  is  respected  at  all  European  airports.  For  example,  the  Commission 
recently opened a State aid investigation at an airport where there were indications 
that the airport, as aviation security provider, was being overcompensated. 

TRANSPARENCY 

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The  second  aspect  concerns  the  transparency  of  security  charges.  The  Commission 
understands  that  the  transparency  of  security  charges  relates  to  information  on  the 
components  used  to  calculate  the  amount  of  security  charges.  This  information  is 
necessary to identify discrimination and thereby ensure consumer protection. 

Transparency also makes it possible to ensure that revenues from security charges do 
not exceed the cost of aviation security. Passengers, cargo shippers and airlines can 
then  verify  that  security  charges  only  cover  relevant  costs.  Similarly,  transparency 
unveils potential discrimination among airlines or air passengers concerning security 
charges. 

From the questionnaire it is evident that most Member States do not have measures 
in  place  which  explicitly  allow  airlines  or  any  other  party  to  regularly  scrutinise 
security  charges  or  associated  costs.  A  number  of  Member  States  rely  on  the 
consultation  of  airport  charges  with  airlines.  These  consultations,  however  seldom, 
are  regulated  by  national  law.  A  few  Member  States  replied  that  security  costs  are 
clearly  separated  from  other  airport  costs,  which  would  give  Member  States  the 
information necessary to verify whether the correct amounts of security charges are 
levied. 

The  Commission  takes  the  view  security  charges  must  be  transparent  and  that 
minimum  EU  standards  may  have  to  be  established  to  ensure  this.  This  could  be 
coupled  with  procedures  to  lodge  formal  complaints  where  the  amount  of  security 
charges/taxes/fees is disputed. 

IMPACT ON COMPETITION 

30. 

The  third  issue  for  this  report  concerns  the  principles  necessary  to  safeguard 
undistorted  competition  between  airports  and  between  airlines.  The  European 
Parliament  argues  that  differences  between  Member  States  with  regard  to  aviation 
security may distort the European aviation market. These differences consist of either 
as  different  levels  of  public  financing  or  additional  measures  imposed  by  some 
Member States. 

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The replies to the questionnaire and the 2004 study confirm that Member States do 
not provide the same amount of public financing for aviation security. Only a very 
small  number  of  Member  States  finance  a  significant  proportion  of  the  overall 
security cost, while most Member States finance a smaller share from public budgets. 
Differences  in  the  proportion  of  public  financing  translate  into  differences  in  the 
amount of security levies. 

Competition  between  airports  can  be  assessed  in  the  light  of  airlines'  criteria  of 
choice,  and  in  particular  by  comparing  factors  such  as  the  type  of  airport  services 
provided  and  the  clients  concerned,  population  or  economic  activity,  congestion, 
whether there is access by land, and also the level of charges for use of the airport 
infrastructure and services.9 

In  the  airport  industry  there  are  currently  several  different  levels  of  competition 
between  the  different  types  of  airport.  Competition  scenarios  are  evaluated  case  by 
case, based on the markets in question. However, research has shown that, generally, 
major  international  hubs  are  competing  with  similar  airports  in  all  the  transport 
markets  concerned,  with  the  level  of  competition  depending  on  factors  such  as 
congestion and the existence of alternative transport, or, in certain cases, with large 
regional  airports.10  Large  regional  airports  may  be  competing  not  only  with  other 
large  regional  airports  but  also  with  the  major  international  airports  and  land 
transport, especially if there is high-quality land access to the airport. This research 
has  also  shown  that  small  airports  do  not  generally  compete  with  other  airports 
except,  in  some  cases,  with  neighbouring  airports  of  a  similar  size  whose  markets 
overlap.11  Consequently,  security  levies  may  in  theory  affect  competition  between 
airports. However, this impact is probably minimal because of the low level of these 
levies and the higher importance of other factors. 

Competition between airlines may also be impacted by differences in the amount of 
security  levies.  However,  the  2004  study  did  not  find  any  evidence  that  security 
levies represent a deterrent to air travel demand. The overall level of security costs 
have  also  decreased  since  then  and  are  therefore  even  less  likely  the  impact 
competition between airlines. 

Competition  between  airports  and  between  airlines  is  therefore  not  likely  to  be 
significantly impacted by differences in the security levies between Member States, 
provided that such differences do not discriminate between airlines, air passengers or 
cargo  shippers.  Transparency  of  security  costs  is  necessary  to  verify  that  security 
levies  are  non-discriminatory  and  therefore  also  important  to  ensure  the  security 
levies  do  not  distort  competition  between  airlines.  However,  the  replies  to  the 
questionnaire made it clear that there is increasing evidence that security cost are not 
transparent  to  the  airlines,  air  passengers  and  cargo  shippers.  Some  replies  argued 
that  increased  transparency  would  make  to  provision  of  airport  security  services 
more  efficient  with  significant  cost  savings  to  the  aviation  sector  as  a  result.  In 

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See para. 38, Community guidelines on financing of airports and start-up aid to airlines departing from 
regional airports, (OJ C 312 of 9.12.2005). 
'Study  on  competition  between  airports  and  the  application  of  State  aid  rules'  –  Cranfield  University, 
June 2002. 
See para. 11, Community guidelines on financing of airports and start-up aid to airlines departing from 
regional airports, (OJ C 312 of 9.12.2005). 

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addition,  as  confirmed  by  the  replies  to  the  questionnaire  existing  national 
procedures  for  ensuring  adequate  transparency  of  security  costs  in  the  EU  are  not 
satisfactory. 

Competition  between  airlines  and  between  airports  may  also  be  impacted  by 
differences in the implementation of aviation security measures. Member States can 
choose to implement additional, more stringent measures than those required by EU 
laws on civil aviation security. Airlines and also airports operating in Member States 
which  impose  more  stringent  measures  than  required  by  the  Regulation  may  be 
disadvantaged to other airports or airlines. 

The most stringent measure with probably the greatest impact on the overall level of 
security  costs  is  the  requirement  to  re-screen  transfer  passengers  and  their  luggage 
that have already been screened on departure from another EU airport. Not requiring 
re-screening  of  already  screened  transfer  passengers  is  usually  referred  to  applying 
"one-stop"  security.  This  requirement  also  increases  the  total  cost  of  aviation 
security.  The  Association  of  European  Airlines  (AEA),  in  the  answer  to  the 
questionnaire,  argued  that  airports  applying  “one-stop”  security  have  significantly 
lower security charges. 

The  Commission’s  view  is  that  re-screening  transfer  passengers  may  have  been 
justified  before  the  entry  into  force  of  the  first  framework  regulation  establishing 
mandatory standards to be implemented at all EU airports but is no longer required 
on  security  grounds.  A  further  quality  control  layer  was  added  in  early  2004  when 
the  Commission  started  inspecting  airports  and  the  relevant  authorities  of  Member 
States. If these inspections were to find serious deficiencies at an airport deemed to 
have  significant  impact  on  the  overall  level  of  civil  aviation  security,  then  the 
implementation  of  “one-stop”  security  will  be  suspended  through  a  Commission 
decision. This has so far been used 18 times, which illustrates the determination of 
the  Commission  to  take  the  necessary  action  to  ensure  a  high  and  uniform  level  of 
security controls at all EU airports.  

Other more stringent measures implemented by certain Member states may also give 
rise  to  competition  issues  and  considerations  on  the  necessary  level  of  security 
measures across the EU. However, Member States should have sufficient flexibility 
to cater for the consequences of higher security risks in some Member states. This is 
the  rationale  behind  Article  6  of  Regulation  (EC)  300/2008,  which  explicitly 
confirms  the  right  of  Member  states  to  implement,  under  certain  conditions, 
measures more stringent than those laid down in Community law. 

Consequently, the Commission is of the opinion that adequately screened passengers 
do  not  need  to  be  re-screened  when  transferring,  provided  that  the  layout  of  the 
airport  infrastructure  allows  for  a  strict  separation  of  passengers  screened  at  EU 
quality level and others. 

CONSUMER PROTECTION 

41. 

Article  22  of  Regulation  (EC)  No  300/08  requires  the  fourth  issue  of  this  report  to 
address  consumer  protection  as  regards  the  distribution  of  the  costs  of  security 
measurers between taxpayers and users. 

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42. 

43. 

As stated above, the provision of aviation security at European airports is essentially 
a state responsibility. Whether these measures are financed by a levy on the users or 
by  the  public  budget  does  not  necessarily  impact  consumer  protection.  It  may 
actually  be  reasonable  that  security  measures  are  financed,  at  least  in  part,  by 
passengers, cargo shippers and airlines as they are best placed to scrutinise the cost 
implications  of  security  measures,  on  condition,  however,  that  such  levies  are 
exclusively used to meet security costs. 

Sometimes  airlines  reveal  the  different  components  of  the  total  air  fare,  including 
security charges, to passengers. There have been concerns as to whether the amount 
of  security  charges  corresponds  to  the  actual  security  charge  levied  on  the  airline. 
However, this issue is addressed in the revised third aviation package, which governs 
the  economic  aspects  of  the  internal  aviation  market  in  the  European  Union.12  The 
provision  on  charges,  including  security  charges,  obliges  airlines  that  reveal  the 
different components of the air fare to quote the correct amount. 

CONCLUSIONS 

–  Aviation  security  at  European  airports  is  essentially  a  state  responsibility.  This, 
however,  does  not  necessarily  mean  that  aviation  security  measures  should  be 
publicly financed. The user-pays principle also has its merits. 

–  The  Commission  takes  the  view  that  the  following  aspects  are  important  for 

protecting consumer interest and for upholding the user-pays principle: 

– 

– 

security fees, charges or taxes do not discriminate among operators and 

security  fees,  charges  or  taxes  are  exclusively  used  to  meet  security 
costs. 

–  The Commission believes that new rules on the transparency of security costs are 
required  to  identify  potential  discriminatory  security  charges/taxes/fees.  The 
bodies  levying  aviation  security  charges  or  taxes  should  therefore  regularly 
provide  operators  with  information  on  the  components  used  to  calculate  these 
charges or taxes. 

–  The  Commission  carries  out  security  inspections  of  European  airports,  which 
ensure  the  overall  level  of  security  across  the  EU.  It  may,  therefore  suffice  to 
apply  the  appropriate  security  measures  at  the  point  of  origin  only,  thereby 
removing  the  requirement  to  repeat  these  measures  at  the  point  of  transfer.  Re-
screening passengers is evidently more costly than applying “one-stop” security. 
Intra-EU  “one-stop”  security  could  therefore  be  considered  as  obligatory  at  all 
European airports, provided the infrastructure separates passengers screened under 
EU requirements from other passengers. 

–  However,  the  aspects  above  require  a  further  assessment  on  the  basis  of  rules 
agreed between the EU institutions (impact assessment). The Commission intends 
to continue preparing a legislative initiative based on this assessment, in particular 

12 

Regulation  (EC)  No  1008/2008  on  common  rules  for  the  operation  of  air  services  in  the  Community 
(OJ L 293 of 31.10.2008, p. 3). 

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on the impact of aviation security on consumers and the functioning of the internal 
aviation market. 

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