RFID Tags Can Find Stray Bags, But Can Airlines Afford Them?

March 8, 2005
RFID promises to be a simple solution for baggage handling, but is technology too expensive for cash-strapped airlines to integrate?

For three days last Christmas week, Janet Suckling haunted the Delta Air Lines baggage area at the Cincinnati/Northern Kentucky International Airport waiting for the arrival of a bag in which her wedding dress and her husband-to-be's tuxedo had been packed.

''They had no idea where the bag went,'' she said. ''I spent all three days crying.''

Similar scenes play out constantly in airports around the nation. The slowly circulating luggage carousel empties until one or two unlucky souls remain, staring in dismay and anger as it dawns on them that their luggage is not going to arrive.

For the last several years, the airlines have envisioned sharply reducing this infuriating problem with new radio frequency identification, or RFID, tags that identify and track items with a precision unmatched by today's bar code scanning systems.

Advocates of the new technology say that it is ready for use. But major airlines would each have to invest tens of millions of dollars to adopt RFID luggage tracking. Most are in such dire financial straits that that kind of money could be as hard to come by as legroom in coach.

''Airlines are concentrating on keeping their doors open for business,'' said Bill Allen, a spokesman for Texas Instruments, a supplier of RFID devices. ''Until it's required, I don't think airlines are going to have an incentive to roll it out throughout their entire system.''

Yet by some estimates, the investment needed to move to radio tag technology could be recouped remarkably quickly.

Today's bar code scanning systems fail to identify as many as 15 percent to 20 percent of the bags moving past automated checkpoints, leaving increasingly understaffed baggage handling crews to identify visually bags by their tags and to redirect them to the proper flights.

The industry tracks its bag-handling performance by measuring bags lost per 1,000 customers. While that number was below five in 2004, that stills adds up to millions of bags going astray annually. Chasing down misdirected luggage and paying claims on lost bags can cost $100 to $200 a bag, according to industry estimates.

In test projects at airports, RFID systems, which use scanners to read codes embedded in microchips sealed inside plastic tags, have accurately identified bags 95 percent of the time they passed a scanner. Such results suggest that RFID systems could eliminate more than two-thirds of the lost baggage problem on average, and perhaps do even better as they were fine-tuned, technologists said.

According to SITA, a technology consulting group for the airline industry that is based in Switzerland, the airlines could save $650 million annually from worldwide deployment of radio tags on luggage.

But how much they would have to change operations before reaping such savings and how soon they could recoup that investment are far from clear.

''The back-end computer systems required to process the data are much more complex than people initially understood,'' said Arthur Filip, managing partner for global transportation in the Americas at Unisys, a leading integrator of information technology for the airlines.

Some airport baggage equipment must be modified to support reliable radio tag scanning. The metal bins that hold bags for loading onto airplanes, for example, interfere with radio signals and might have to be covered or replaced.

Another challenge for airlines and airports is making certain that the luggage tags can be distinguished from tags in other RFID systems being developed to identify aircraft parts used in maintenance and to track movements of airport service vehicles.

Moreover, keeping in mind forecasts that each piece of luggage may one day have a radio tag to track its movement from the manufacturer to the department store, airlines will need systems that do not get confused if a traveler forgets to remove such a tag after buying the bag.

There are also disagreements about the design for the tags. One group of airlines, led by carriers like Delta, American Airlines and United Airlines, favors tags that currently cost about 25 cents and function basically like license plates. They carry unique numbers that can be used for access to data about a bag's owner, origin and destination in central databases.

A number of European carriers favor more expensive but more versatile tags that can be directly encoded with such information when the bag is checked so that the data travels with the luggage.

The American approach is currently being introduced at McCarran International Airport in Las Vegas and at Hong Kong International Airport. McCarran is among the few major American airports where the airport administration, rather than the airlines, oversees baggage handling; some RFID specialists predict that the technology will spread more quickly in Europe and Asia, where decisions about technology investments rest primarily with airports, not airlines.

Narita Airport outside Tokyo, for example, has been experimenting with the more sophisticated radio tags. It is now planning a test with Air France and KLM that would attach RFID tags to luggage flying between Amsterdam and Tokyo and between Paris and Tokyo.

Eventually, domestic airlines may be forced to adopt RFID luggage tracking for security reasons. Radio tagging could help security officials quickly find individual bags for examination, even after they have been loaded on a plane. That has attracted the attention of the Transportation Security Administration, which is providing 75 percent of the $125 million going into building McCarran's new baggage management system. The first arm of the system is expected to begin operations in May.

The airline most eager for the radio tagging has been Delta, which in recent years has tumbled toward the bottom of the annual rankings of how effectively airlines handle luggage.

Delta, based in Atlanta, announced last June that it would invest $15 million to $25 million over two years to put radio tags on every bag it handles and to install electronic readers to scan the tags. The airline, which said it misdirected fewer than a million of the 80 million bags it handles in an average year, projected that the radio tag system would quickly pay for itself because the company spends $100 million annually dealing with luggage mistakes.

Delta also predicted that the technology could provide a marketing advantage.

"'It will be plainly obvious to the traveling public who has this and who doesn't,'' Robert Maruster, the Delta vice president in charge of the airline's hub in Atlanta, said last June.

But Delta quietly put the project on hold last fall as it struggled to avoid bankruptcy. ''We're not walking away from it,'' said Benet Wilson, a Delta spokeswoman. ''We're just postponing it indefinitely. We felt we could use our resources in other areas.''

Mrs. Suckling, who was married in a dress she hurriedly bought at a mall, might suggest customer service. She said that filing a compensation claim for the lost luggage involved dealing with a rude and unhelpful customer service agent based in India whose accent was hard to understand. That process made her angrier than the lost luggage.