Spurred on by continued terrorist threats, European Union (EU) airport security regulations and constant breaches despite security beef ups, countries across Europe are further heightening focus on strengthening airport security. Moreover, the dramatic increase in passenger traffic had initiated Eurocontrol to renew its air traffic forecasts for Europe.

The new forecast is likely to lead to a substantial increase in airport capacity through upgrade programs and new construction of passenger terminals. In addition, the privatization of some of the European airports necessitates better security equipment to meet the latest international security standards mainly with a view to attain world class airports status. Aided by these factors, the European airport security equipment market is set for considerable growth in the coming years, offering lucrative opportunities for the investment community.

Among the market sub-segments, the close circuit television (CCTV) and the perimeter fencing sub-segments look prospective for the private equity investors. Although the CCTV market is at a mature phase, there is good growth potential for the sub segment in Eastern European countries.

"Eastern Europe holds significant potential for CCTVs as countries just entering the European Union are beginning to adopt new security measures prescribed by the European commission," notes the analyst of this research service. "The perimeter fencing sub segment meanwhile is currently seeing a consolidation wave with many small companies being acquired by larger conglomerates."

Biometrics Segment holds Tremendous Promise

Continuing with the market segments, the biometrics segment holds enormous promise. The renewed push by European authorities to study measures similar to the USA's fledgling Registered Traveler program came into being soon after they uncovered the alleged plot to blow up passenger jets en route to the United States.

Concrete decisions regarding the deployment is due in later 2007 and 2008 hence this market presents robust potential opportunity for venture capital investors. Small start up companies with innovative technology can look at financial backing from venture capital firms as biometrics looks particularly attractive to venture capitalists due to its explosive growth rates, technology intensive nature, and attractive exit opportunities. Biometrics apart, the explosive detection segment is another segment where there is significant opportunity.

Notwithstanding the growing opportunities, the sluggish response of the EU and individual governments to prioritizing airport security has resulted in the slow purchase of airport security equipment. "The high costs associated with the purchase of airport security equipment is also a major concern," says the analyst. "However this is all likely to change with the increased government budgets available for the countries looking at entering the EU as well as the EU's decision to standardize airport security measures across member countries."