Capstone believes the Trump administration’s efforts to privatize Transportation Security Administration (TSA) security screening services, combined with concerns raised by recent shutdowns of the TSA, creates an opening for the private sector to take over airport security functions currently provided by TSA. Most of the firms in this space are privately held security companies.
- If President Trump’s FY27 budget justification is adopted, the administration says it will “[begin] the privatization of TSA’s airport security screeners” and require all small airports to outsource the screening of passengers and baggage.
- In addition to privatizing the operation of checkpoint and baggage screening functions at airports, the TSA wants to examine ways to reduce other expenses completely unrelated to headcount like the cost of maintaining and replacing airport screening equipment.
- The decision to completely privatize aviation security functions has the potential to lead the TSA to become a regulator that sets standards and certifies the vendors of equipment, airport security plans, and the contractors that provide security screening services.
- Companies that operate in this space and would benefit from a broader privatization of airport screening functions include Covenant Aviation Security, LLC, GardaWorld, Centerra Group, VMD Corp, and FirstLine Transportation Security, Inc.
Airport Screening Overview
The TSA was created after the September 11th, 2001, terror attacks to protect the nation’s transportation systems. TSA’s primary focus is on the roughly 440 airports that offer scheduled air service, and it devotes most of its resources to screening all passengers, luggage, and cargo passing through these airports. TSA also performs other functions like the certification of security screening equipment used at airports and oversees the screening of all air freight, even if the actual screening of cargo is done by private contractors.
Congress’s goal in creating the TSA was to federalize airport security and impose stricter security screening requirements than before the attacks, when screening was done by airport staff and private contractors. There was also a need to increase funding to deploy screening equipment at US airports and increase staffing to meet a legal requirement that all baggage and passengers be screened—something that was not required before September 11th. As of 2026, roughly a third of this aggregate cost of running TSA is paid for by passengers through a passenger security fee included in airline ticket prices, with the remaining two-thirds funded by an appropriation from Congress.
TSA also serves other important functions, including:
- Developing and testing new security protocols and screening equipment.
- Certifying airport security plans and providing oversight to third parties involved in the screening of passengers, baggage, and cargo.
- Procuring new screening equipment and maintaining existing screening equipment, almost all of which is owned by TSA and installed at US airports.
- Certifying screening policies and procedures used at foreign airports that are the point of origin for international flights arriving in the US.
When the TSA was created in 2002, Congress also included legislative language allowing the TSA to use private contractors to provide TSA- contracted screening services at US airports. This gave rise to the Screening Partnership Program (SPP), which allows TSA to outsource screening services to contractors provided they adhere to TSA standards and can show they are more cost-effective than having TSA provide these services with federal employees. As of today, 20 of the more than 400 airports with regularly scheduled passenger air service are enrolled in SPP, and the remaining airports operate with TSA employees as screening personnel. Most of the airports that participate in SPP are in small aviation markets, the largest among them being San Francisco International Airport.
Trump’s Budget Calls for Privatization
Trump’s budget justification for FY27 calls for a massive expansion of the SPP, increasing spending for it to $805 million from $286 million. The agency believes this will save more than $52 million, primarily by reducing screening personnel costs. The intention is to shift all Category III and Category IV airports into the SPP.
TSA categorizes the 440 airports that offer regularly scheduled passenger air service within the country based on their risk profile and annual passenger enplanements. Category X airports are the largest and tend to face the most risk. Category I airports are the next largest airports and tend to be regional hubs, while Category II airports are smaller regional airports. Category III and Category IV airports are the smallest airports and are generally believed to face far fewer risks than larger airports, and it is these airports that are being targeted for inclusion in SPP. The exact number of airports that fall into each category is not publicly available; based on how Congress defined each category and publicly available data on enplanements, you can figure it out (see Exhibit 1).
Exhibit 1: TSA Airport Categorization
| TSA Category | Statutory Definition | Airports in 2025 |
|---|---|---|
| Category X | Airport regularly serving an aircraft operator or foreign air carrier, with annual enplanements of 5 million or more, or international enplanements exceeding 1 million | 44 |
| Category I | Airport regularly serving an aircraft operator or foreign air carrier, with annual enplanements of 1.25 million or more | 46 |
| Category II | Airport regularly serving an aircraft operator or foreign air carrier, with annual enplanements between 250,000 and 1.25 million | 90 |
| Category III | Airport regularly serving an aircraft operator or foreign air carrier, with annual enplanements of fewer than 250,000 | ~120 |
| Category IV | Airport regularly serving an aircraft operator or foreign air carrier, but not providing passenger service | ~140 |
Source: GAO, TSA, Capstone analysis
While the TSA intends to privatize the operation of screening services at America’s smallest airports, this still represents a potential privatization of these services at as many as 60% of the 440 or so airports with regularly scheduled passenger service.
TSA has reportedly been pitching this privatization initiative to airports for several months and is calling the program “TSA GoldPlus”. Some reports suggest TSA is only contracting out the operation of screening services, while others suggest that the management and perhaps even the ownership of screening equipment could also be privatized. However TSA decides to move forward with this privatization initiative, what is clear is that contractors could see the universe of airports they provide screening services to increase by more than 1000% over the next few years.
Privatization a Solution for TSA’s Challenges
TSA has for years faced significant budgetary challenges that can largely be traced to the fact the demand for air travel has increased substantially in the last two decades, while TSA’s budget and staffing levels have failed to grow at the same pace. This is particularly over the last decade where TSA saw the number of passengers the agency screens rise from just over 700 million to over 900 million passengers (up 28.2%) while the number of Transportation Security Officers (TSOs) responsible for screening passengers, baggage, and cargo has only grown 7% over the same time frame. While TSA’s budget has increased by more than 50% in a decade, most of that increase can be attributed to inflation and a substantial increase in the cost of maintaining older screening equipment that is nearing the end of its economically useful life cycle.
The privatization of screening services at smaller airports is intended to help solve TSA’s budgetary problems, which include the following:
- TSA’s budget has not increased on an inflation-adjusted basis to allow the agency to keep up with the increase in demand for screening caused by the growth in air travel and air freight services.
- Because much of TSA’s equipment is older and in need of replacement, the agency has doubled how much it spends on maintenance from roughly $300 million a decade ago to as much as projected $600 million in 2026.
- TSA is in the midst of an upgrade cycle for its carry-on baggage screening machines, but lacks the capital needed to upgrade these machines, given its budgetary constraints.
- In 2023, President Biden gave TSOs 30% raises to bring the salaries of these workers in line with federal general schedule pay scales and help improve retention, and this exacerbated TSA’s budgetary problems.
Outlook for Privatization
It is not a forgone conclusion that President Trump will be successful in forcing America’s smallest airports into SPP, but we are generally constructive on privatization in airport screening. We come to this belief not just because the Trump administration is supportive of privatization. SPP airports were unaffected by the inability of Congress to pass a budget for TSA so screening personnel at the 20 airports enrolled in SPP never had to work without a paycheck. These airports were unaffected because screeners and their employers are paid through pre-funded federal contracts that are not part of the federal budget. Because the funds are pre-allocated to cover the contracts, screeners were paid throughout the most recent government shutdowns.
The past two shutdowns were extremely disruptive for TSA and caused many TSA workers upset about not being paid to either quit or call out sick. This led to long lines at passenger screening checkpoints at affected airports and helped elevate the visibility of TSA’s privatization of screening at some airports because they were unaffected by the shutdown. We believe broader awareness of SPP and a desire by both airport managers and airlines to insulate passenger screening services from future TSA shutdowns could push more airports toward partnering with TSA to privatize security at a wider universe of US airports.
Read more from Capstone’s Special Situations team:
The Budget Squeeze: When State and Local Revenue Falls and Federal Funding Disappears
The Coming SLG Boom
