On any given day, the specials at Bryan Owens' Unclaimed Baggage retail store in Scottsboro, Ala., include deals like a $75 Sharper Image pillow for four bucks, a brand-new Trivial Pursuit 20th anniversary edition board game for $15 and a Schwinn double jogging stroller in excellent condition for just $40.
Judging from the latest US Dept. of Transportation statistics, Owens' business strategy-buying unclaimed luggage and cargo from airlines after a mandatory 90-day search for the owners expires-is sure to burgeon: The average number of mishandled bags, including lost luggage, grew from 4.61 to 4.81 per 1,000 passengers between August 2003 and August 2004, an increase of 4%, a trend that holds for other months as well.
A new lineup of comprehensive bag management technologies being deployed by several pathfinder airlines and airports could, however, cut down on Owens' inventory while saving carriers hundreds of millions of dollars every year in the process. Chief among the airline frontrunners are Delta Air Lines with its anticipated networkwide RFID deployment and JetBlue with its new baggage reconciliation and data warehouse package that will be deployed at all 27 airports the low-fare carrier serves. Airport systems are evolving with the rollout of integrated bag management products by SITA and RFID tracking infrastructure by companies like FKI Logistex.
The financial magnitude of the lost baggage problem is immense. Katherine Mayer, VP-airport services for SITA, says an airline like Delta will spend $100 million a year locating and returning 1 million of the 80 million bags it flies-an average of $100 a bag. Payment for a lost bag averages about $140 ($20 per kg.) under the Warsaw Convention, not including the cost in customer satisfaction. Says Mayer, "That's profit that is effectively disappearing needlessly down the drain."
As for who pays to solve the problem, she says airports often will purchase a baggage handling system and charge airlines for usage where there are shared terminals-a more frequent situation in international airports-while airlines tend to buy or develop their own systems for locations where they have dedicated terminals.
SITA offers a system called Integrated Baggage Solution that Mayer says can reduce an airline's number of lost bags by 25%, translating into a return-on-investment for the upgrade in as little as one year. The company's premium offering is installed in more than a dozen airports worldwide and is set to go into eight more major facilities under recently announced contracts.
IBS has three components that can be used independently or together. BagManager reconciles bags with passengers (positive match) as they move through and between airports. BagMessage is a "community based" message product that enables airport baggage systems to communicate with an unlimited number of airline departure control systems for automatic baggage sortation. WorldTracer, SITA's automated service for lost and mishandled luggage, features distinct modules for baggage tracing, management and claims investigation. WorldTracer also lets passengers track the progress of their luggage via a website.
Lufthansa Systems, a SITA competitor in this market, offers similar efficiency gains with its BagSuite package containing two independent modules, BagScan and BagTrail.
BagScan, first installed at Chicago O'Hare Terminal 5 in 1998, is used for luggage tracing, reconciliation and re-flighting-figuring out what to do with bags when a passenger misses a connecting flight or a flight is canceled. Michael Weghorst, product manager-bag management systems, says BagScan requires handlers to use wireless devices to scan bag tags before a bag is loaded on an aircraft. If the bag then needs to be offloaded because the passenger doesn't show-a security requirement for international airlines and domestic carriers without access to explosive detection systems-the scanner captures the location of the bag in the container and the position of the container in the airplane, accelerating the removal process. Weghorst says the software also will work with RFID tags and readers.
Lufthansa Systems' newest offering, BagTrail, is billed as a proactive tool that an airline can use to make its baggage flow more efficient. In addition to being a data "warehouse" that customer service and lost-and-found can use to locate a wayward bag, Weghorst says BagTrail can analyze the "weak points," helping a carrier understand why bags are getting lost in the first place.
JetBlue, the launch customer for BagSuite, says it expects to reduce its annual costs of dealing with mishandled luggage by 30% once the system is deployed at its 27 baggage handling stations in the US. The first phase of the deployment, at its operation at New York JFK Terminal 6, was scheduled to be complete by the end of November. The carrier apparently can use some help: DOT figures showed a 12% increase in its mishandled baggage for the month of August 2004 compared to August 2003.
Regardless of the quality of the bag management suites from the likes of SITA and Lufthansa Systems, there remains the problem of capturing the relevant information about a bag as it moves through the system. SITA reports that more than half of all mishandling incidents (54%) relate to transfer baggage, with 17% caused in part by failure to load the bag. Philip Heacock, director-airport systems for FKI Logistex, an integrator of baggage handling systems, says reasons for the Achilles' heel include ramp workers damaging bag tags so that barcodes are unreadable by optical scanners, barcodes that are smaller than the IATA standard or weren't printed properly and environmental aspects like the tags getting wet.
One solution is to invest in RFID bag tags, a technology that should boost read rates to 99% or so based on the results of Transportation Security Administration pilot programs that FKI Logistex and others have completed at several airports. Instead of reading tags optically, the RFID system creates an electromagnetic field that powers up a tiny nonbattery chip embedded in the tag. The chip radios back an identification number set at the factory, updating a passenger's record with the bag's progress and instructing the baggage system where to send the bag next based on flight number and security status. While the record of a bag's progress through the system now generally stops with the last optical scan of the tag before it reaches the baggage makeup area, RFID tags are readable all the way into the aircraft's baggage hold.
Two airports, Las Vegas McCarran and Hong Kong International, are in the midst of installing RFID-capable airportwide baggage handling systems, while at least one airline, Delta, plans to deploy the technology across its entire network, an action Heacock says will "substantially decrease" its number of mishandled bags.
One issue at the moment with RFID, says Mayer, is that the bag tags cost about 25 cents each, a price that can be reduced somewhat through bulk purchases by airlines and airports together. How many airports will be willing to participate is questionable: SITA's latest IT Trends Survey, which compiled research from senior management at one-third of the top 100 airports, revealed that as many as 40% of the respondents have no plans to implement RFID in the future.
For airlines, Heacock says it is only a matter of time before RFID becomes standard operating procedure. "Airlines know [it] is coming. They're waiting for it either to be mandated or for their finances to pick up to solve the baggage issue," he says. "As soon as one of the major carriers does it, I think you'll see the other major carriers do it."