After the September 11, 2001 attacks on the World Trade Center, the airline industry suffered a drop in passenger volume that is still felt today. Passengers declined by 20 percent in the first year and 10 percent in the second year. Together, the estimated economic impact totaled between $80 billion and $250 billion.
What would the impact be if a terrorist took out just one plane with a shoulder-fired missile? It could be as high as $250 billion, according to a report published in the upcoming issue of the INFORMS publication Decision Analysis and authored by Detlof von Winterfeldt and Terrence M. O’Sullivan of the Center for Risk and Economic Analysis of Terrorism Events (CREATE) at the University of Southern California.
There are steps airlines could take to prevent such attacks, such as installing countermeasures on planes to deflect heat-seeking missiles, but they could cost the airline industry as much as $10 billion for installation and another $2.5 billion per year for operation and maintenance. Using the principles of Operations Research (O.R.) and taking into account such factors as the economic impact, likelihood of an attack and the cost of the countermeasures themselves, von Winterfeldt and O’Sullivan concluded that the preventative steps may be worth taking.
Still, the issue isn’t so cut and dry. Other factors come into play, such as the true cost of countermeasures–estimates vary depending on the source–and the possibility of terrorists changing tactics once the countermeasures are in place. The O.R. model the authors created can be easily refitted as additional information becomes available, offering a tool to help policymakers make better decisions in reacting to threats.