Airport Security
Are Advanced Technology Deployments Enough to Grow the Market?
David Fishering, Industry Analyst
Aerospace & Defense
August 28th, 2008

Agenda
• Market Definitions
• Market Forecasts
• Market Drivers and Restraints
• Market Trends
• Market Challenges
• Technology Roadmap
• Competitive Environment
• Market Attractiveness
• Frost & Sullivan Info
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Market Definitions
Checked Baggage Cargo Screening
• Predominately • X-ray, CT, or trace
explosives detection systems that can scan
systems using CT individual packages as
technology well as palletized cargo
AIRPORT
Checkpoint (Carry-On) SCREENING Checkpoint (Passenger)
• Baggage screening • Systems that identify
includes legacy X-ray substances or
and AT X-ray systems contraband on an
individual
• Desktop/handheld
explosives trace • Technologies include
detection are also mm-Wave imaging, Z-
included in this segment Backscatter, trace portals
and metal detectors
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Summary of Key Findings
Airport Screening Markets: Spending Forecast by Segment (U.S.), FY 2007-2012
2.2%
600.0
6.4%
Spending ($ Million)
500.0
17.2% 400.0
32.7%
300.0
200.0
100.0
0.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Year
80.6% Checked Carry-on Passenger
Baggage Baggage Screening 60.9%
4.9%
26.0%
FY 2007 FY 2012
69.1%
FY 2007-2012 Note: All figures are rounded. Source: Frost & Sullivan
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Summary of Key Findings
Airport Screening Markets: Spending Forecast for Equipment and Services (U.S.), FY 2007-2012
600.0
Spending ($ Million)
500.0
400.0
300.0
57.1% 200.0 50.9%
100.0
0.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Year
Equipment Procurement Services
42.9% 49.1%
47.7%
52.3%
FY 2007 FY 2012
FY 2007-2012 Note: All figures are rounded. Source: Frost & Sullivan
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Market Drivers and Restraints
Length of Arrow indicates relative impact
Strong
High threat
perception
continues to
Drivers
drive security TSA’s layered The reactionary
spending The demand for nature of the
security approach
more efficient airport security
continues to
systems drives market continues
provide
growth to create Weak
opportunities for
new technologies opportunities
TSA is focusing
Weak
on secondary Security spending
Restraints
screening is being siphoned
Existing technologies away from
DHS pilots rarely
technology technology
lead to mass
deployment is
deployment
reaching capacity
Strong
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Industry Trends
FY 2007-2008 FY 2009-2010 FY 2010-2012
Sensor Fusion/
Integration
Interoperability
Data and alarms from sensors are Sensors communicate findings to
analyzed at each station each other providing a holistic view
independently of the threat prior to an alarm
Source: Frost & Sullivan
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Challenges
Airport Screening Market: TSA Budget Breakdown (U.S.), FY 2008
2.9% 3.6% 18.6%
Screening Budget
11.6%
5.0%
52.4% 1.5%
4.5%
EDS/ETD Checkpoint
Air Cargo Training
Screener Com pensation Privatized Screening Airports
HR Services Aviation Direction and Enforcem ent
Note: All figures are rounded. Source: Frost & Sullivan
Airport Screening Market: TSA Screening Budget (U.S.), FY 2007-2012 Airport Screening Market: TSA Budget vs. Spending (U.S.), FY 2007-2012
1,400.0 1,600.0
1,200.0 1,400.0
Spending ($ Million)
Spending ($ Million)
1,000.0 1,200.0
800.0 1,000.0
600.0 800.0
400.0 600.0
200.0 400.0
0.0 200.0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
0.0
Air Cargo 55.0 73.0 122.8 221.0 265.2 278.5 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Checkpoint 173.4 250.0 200.0 200.0 200.0 200.0 Budget 997.3 1129.8 1141.2 1257.0 1319.4 1353.1
EDS/ETD 524.4 583.0 621.1 646.6 668.6 685.3 Spending 453.6 408.0 425.2 478.1 506.3 542.5
Note: All figures are rounded. Source: Frost & Sullivan Note: All figures are rounded. Source: Frost & Sullivan
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Challenges - TSA’s Layers of Security
Terrorist Paths
• TSA’s “Layers of Security” concept Intelligence
Customs and Border Protection
has provided opportunities for Joint Terrorism task Force
multiple technologies – there is no No Fly List and Passenger Screening
Crew Vetting
silver bullet VIPR
Canines
Behavior Detection Officers
• However, this approach has also Travel Document Checker
Checkpoint/TSOs
limited real growth because it is Checked Baggage
human heavy 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
Source: TSA
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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
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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
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TSA’s Technology Deployment Plans
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Technology and Solution Roadmap
2007 2008 2009 2010 2011 2012
Computed Tomography (CT)
Checked
Baggage Advanced Technology (AT) X-ray
X-Ray
AT X-Ray
Trace Detection
Checkpoint Trace Portal
Security Backscatter
Passive Millimeter Wave/Terahertz Imaging
Active Millimeter Wave
Metal Detection
X-Ray
AT X-Ray
Air Cargo CT
Trace Detection
Canine/Authorized Shipper
Tech Trend Sensor Fusion and Interoperability
Source: Frost & Sullivan
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Competitive Environment
Airport Screening Markets: Market Share (U.S.), 2007
Rapiscan Other
Reveal
2.2% 3.8%
Imaging
8.8%
Smiths
Detection
9.7% GE Homeland
Protection
52.7%
L-3 Security
and Detection
22.9%
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Most Attractive
Market Attractiveness Grid Attractive
Least Attractive
Most Attractive Markets
Checked
Checked
Baggage
Baggage
High 2012
2012
2012
2012
2012
2012
Attractiveness
2012
2012
Revenue
Air Cargo
Air Cargo
Security??
Security?? Implementation Decisions
in favor of Screening
Technology Carry-On
Carry-On
Screening
Screening
Decision postponement
or a non-tech solution
such as Canine teams Passenger
Passenger
Screening
Screening
2012
2012
Low
Significant Market Open
Barriers Openness Market
Source: Frost & Sullivan
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Aerospace & Defense Market Coverage
C4ISR
Unmanned Systems
Homeland Security
Commercial Aerospace
Training and Simulation
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