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The continued threat of terrorism is set to drive growth across the entire European airport security equipment market, especially given recent European Union legislation, which aims to impose standard security requirements across all member states.

Europe has immense market potential: estimates for the period 2006-2010 indicate 20 new airports will be built and 36 existing ones will need to be upgraded.

New analysis from Frost & Sullivan predicts that this market will see top-line growth in the region of 34.3%, in part due to significant growth opportunities in the burgeoning economies of Eastern Europe.

Following the September 2001 terrorist attacks, countries across Europe began to strengthen airport security, though these efforts were intensified soon after the London explosions in July 2005.  Increased airport security measures were announced by a number of countries, including Hungary, Italy, Denmark, the Czech Republic and Poland.  In London, transport and leisure stocks fell following the explosions, and stocks were also affected outside Europe, including in the United States.  However, shares in airport security companies rose, with Isonics Corp, a supplier of portable devices for detecting explosives up 10% to US$3.33.

The ongoing terrorist threat in the wake of the London explosion has forced European authorities to rethink their approach to airport security.  This includes the decision to go onto heightened alert after twenty-four terrorist suspects were held over an alleged plot to blow up as many as 10 transatlantic jets destined for the U.S.A. in August 2006.

This has created opportunities for small and medium-sized companies offering niche airport security equipment or add-on components, with growth prospects focused primarily in the explosive detection and biometrics segments -- above all in the areas of baggage and cargo screening, as well as in passport verification.

There have also been a significant number of venture-capitalist and private-equity deals in this market, including deals from traditional institutional investors.  Private equity investors have good prospects in the CCTV and perimeter fencing sub-segments, while venture capitalists would do well to explore areas such as biometrics and explosive detection, as these are experiencing rapid growth and are by nature technology-intensive fields.