What is the principal error associated with an Inertial Navigation System?

The principal error associated with an Inertial Navigation System (INS) is degradation of position with time. An INS operates based on the principle of measuring the acceleration and rotation of an aircraft over time. While it does not rely on external signals, it is subject to gravitational drift and the accumulation of errors known as "drift," which results from minor inaccuracies in its sensors. Over time, these small mistakes compound, leading to a significant deviation in the calculated position.

In contrast to this, the other options represent potential issues but are not fundamental errors inherent to the functioning of an INS. For instance, signal loss is more relevant to navigation systems that rely on external signals, such as GPS, rather than an inertial system which is self-contained. Hardware malfunction could occur in any navigational system, but it is not a systematic error that affects the overall operation of an INS. Environmental interference typically affects systems like GPS more significantly, whereas an INS is designed to operate regardless of external conditions.

Thus, the continuous accumulation of positional error over time accurately characterizes the main challenge faced by systems that rely solely on inertial navigation.