Frost & Sullivan Predicts $9B in APAC Airport Security Spending by 2015

According to Frost & Sullivan’s Aerospace & Defense Practice Asia Pacific Consultant Amartya De, terrorist threats combined with increased air traffic are factors that drive the airport security market and boost security spending in this region.

The region's airport security market’s estimated market share is 12 percent of the total Homeland Security spending. Frost & Sullivan estimates that the market will grow from USD $5.21 billion in 2008 to USD $9.23 billion in 2015 with an expected CAGR of 8.5 percent from 2008 to 2015.

The three main segments of the airport security market are airport screening, surveillance and access control markets. “The screening segment is estimated to have the largest share in the market in Asia Pacific followed by access control and then surveillance” stated De.

De said, “This airport security market is a highly fragmented market and the supply chain consists of security system manufacturers, distributors and system integrators. Many new technologies like IP-based surveillance and biometrics identification are being widely used in this region. Integration of different systems at different operational areas is considered to be a key challenge in this market.”

There has been significant development in new airport construction in Asia Pacific. These developments come with the need to adopt more up-to-date security infrastructure. New terminals and runway construction are likely to exceed USD$46 billion during the period from 2010 to 2025.

China and India, together, have planned to develop and construct at least 93 new airports in an effort to cater to the fast-growing air traffic demands in those two countries, with combined expected expenditures of more than USD $33.4 billion. Some of the key markets for airport security growth are Singapore, Thailand and Hong Kong, followed by China, India, Indonesia and Malaysia.
Massive upgrade programs are being undertaken by Diosdado Macapagal International Airport in Philippines and Changi Airport in Singapore. Singapore’s Changi Airport has recently built a Budget Terminal to cater to low-cost airlines. It also plans on a terminal up gradation, which is expected to increase the airport’s security spending. Total airport security spending in Singapore is expected to reach $298.0 million by 2015.

Australia has plans to build new terminals at five of its international airports, with a total estimated value of USD $6.1 billion from 2009 to 2015. Major Australian airports in Sydney, Melbourne and Hobart are currently upgrading their airport terminals. Total security spending is expected to reach $640.2 million by 2015.

Vietnam is also looking to develop at least three new airports and expand its existing seven airport terminals between 2010 and 2020, with ambitious plans to become the air traffic hub in Southeast Asia. In Northeast Asia, Japan and South Korea are expected to spend approximately USD $9 billion from 2009 to 2020 in expanding the capacity handling of three major airports in that region. South Korea’s Incheon Airport has developed itself as one of the world’s busiest airports and it also has plans to build “Air City” by 2020 for establishing itself as a major business centre. Total security spending in South Korea is expected to reach $518.4 million by 2015.

Hong Kong has a five-year plan and a 20-year plan that is rolled out every five years for airport development. Hong Kong International Airport’s Master Plan 2025 is expected to increase the airport’s passenger and cargo traffic with long term projects. Total spending in Hong Kong is expected to reach $470.5 million by 2015.

Thailand’s government has plans for further development of airports that are expected to carry on until 2016. Total spending here is expected to reach $411.3 million by 2015.

Malaysia is trying to promote itself as the aviation hub for regional budget airlines sector and hence undergoing projects for low-cost carrier terminals. Total spending in Malaysia is expected to reach $180.6 million by 2015.

De said: “Lots of foreign companies have tried to enter these markets through partnering with the regional companies. But with more than 150 competitors in the market, profit margins for the market participants have reduced significantly. Hence, to stay competitive in the market, companies should provide value added services like training and support in addition to functional benefits of the products and services.”

“The Asia Pacific region has had relatively good success in the homeland security market. Some of the factors contributing to this success are the favoring of tried-and-tested security solutions over new and indigenous solutions,” De added.

He said that government and semi-government agencies have been reluctant to fund research and want ready-made security suites to be installed and maintained with vendor support. Hence, the long-term costs of maintaining security platforms or solutions are scrutinized under stringent budgets. Only efficient security solutions that also are cost effective have been successful and govern larger market share.

“Cutting edge technology doesn’t always score so much in the final procurement decision as much as customization to local needs does,” De said, adding that “Spending in the homeland security and counter-terrorism landscape is expected to remain strong. The rising GDP in the region increases the household disposable income and free trade and, hence, amplifies demand in the regional commercial and business air travel. Economic growth is directly interrelated to air travel growth, which leads to increased airport expansion and, thus, increased demand for more airport security solutions. Asia Pacific is also home to almost 4 billion people, with a projection of up to 4.7 billion people by 2025, a good indication for growth in the commercial aviation industry.”

Frost & Sullivan, the growth partnership company, partners with clients to accelerate their growth. The company's research and consulting services empower clients to generate, evaluate, and implement effective growth strategies.

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