PAYING FOR EFFICIENCY What a trip! You are exhausted from changing planes (three times because of cancellations) and try
Posted: Sun May 08, 2022 7:54 pm
PAYING FOR EFFICIENCY
What a trip! You are exhausted from changing planes (three times
because of cancellations) and trying to corral your colleagues as
well as their luggage. And after all the cramped seats, complaining
travelers, long lines, and marginal food, your team still has not
come to a decision about what to do—at your own airport.
Last month, you and your management team from Hartsfield-Jackson
Atlanta International Airport began discussing using
radio-frequency identification (RFID) tags in the airport’s
baggage-handling operations. Recent reports on lost luggage have
caused more than a ripple of concern, with roughly one in every 150
U.S. passengers losing a bag in any given year. U.S. airlines spent
an estimated $400 million to replace mishandled luggage in a recent
year, yet passengers are regularly incensed that the airlines give
only partial reimbursements for lost bags and belongings. The cost
of lost luggage, however, is not just the $400 million in
reimbursements. There’s the time and expense of staffing large
customer-service departments to take complaints, process claims,
track down and identify missing baggage, and deliver found bags to
either the owner’s travel destination or home. Multiple deliveries
are often made, as the bag arrives at the passenger’s destination
after he or she has left for another destination or returned home.
The International Air Transport Association estimates that airlines
worldwide could save $760 million a year by reducing lost
luggage.
Your team would love to reduce the costs associated with lost
luggage at Hartsfield-Jackson (ATL), which consistently wins the
title of world’s busiest passenger airport. Nearly 6.5 million
travelers pass through the airport in a given month and bring about
75 metric tons of luggage with them. That is more than the monthly
amount of mail or commercial freight (think FedEx and UPS) that
passes through the airport’s facilities!
Thirty-one airlines take off and land at ATL, but Delta accounts
for over 58 percent of passenger volume. As (bad) luck would have
it, Delta has a dismal ranking for lost luggage, reporting 6.8
mishandled bags per 1,000, second only to US Airways’ 7.7 losses
per 1,000. Company-wide, Delta handles 1.3 bags per passenger, and
there is no reason to think this number is any lower in Atlanta,
its biggest hub. That means Delta alone puts over 160,000 bags into
the ATL system each day!
To manage this tremendous flow of personal belongings, ATL uses the
bar-coding system in use at the majority of U.S. airports. Adhesive
paper tags are very economical at 4 cents each, but they also rip,
smudge, get misread, or get torn off completely. Scanners even have
trouble with twisted tags. Baggage sorting with bar-coded tags is
only 80 to 90 percent accurate. And once they are printed, that is
it. If a passenger’s destination changes due to, say, inclement
weather, flight cancellations, or being rerouted, the bar-code
label cannot change to reflect the new itinerary.
Armed with all this, well, baggage, your team went on a trip to Las
Vegas’s McCarran International Airport, which has been using
radio-frequency identification tags to manage its bag handling.
McCarran is the fifth-busiest airport in the United States, and it
handles more than 70,000 outbound bags per day. Using bar-code
readers, as many as 7,000 bags per day were not read properly and
tossed into an “unknown” pile to be hand-sorted. There was also the
headache of lost luggage for passengers on quick three- and
four-day excursions to consider. In the end, the airport decided to
invest in a system based on RFID tags. Tags costs 21 cents apiece,
or five times the cost of a bar-code tag, but the accuracy of the
RFID system has cut the number of hand-sorted bags by 90 percent,
and the tags can be rewritten electronically mid-travel if
itineraries change. The RFID system has enabled the airport to let
inbound passengers on long flights check their bags all the way to
their casino or hotel so that their luggage is waiting for them
when they arrive.
What to do? ATL is already in the middle of a $5.4 billion campaign
to improve facilities. Management does a great job managing the
finances of the airport, and Hartsfield Jackson is considered a
good risk (meaning a safe bet) for lenders. The hardware required
to start using RFID is cheaper than maintaining the hardware that
manages the system of traditional bar-code tags, but the difference
in the cost of the tags is substantial if decreasing. And who’s
going to foot the bill? Should the airlines, which are nearly all
suffering financially, be expected to pay for the program that will
ultimately benefit them as well? Delta already stopped paying its
$3.4 million annual rent to the airport as part of its bankruptcy
restructuring. If they don’t pay for the hardware required to read
the tags, should airlines at least pay for the tags
themselves?
Maybe you need to take another trip, this time to Furth, Germany,
where Siemens, a provider of industrial software, has built a mock
airport to demonstrate how automated technology can help airports
improve efficiencies in nearly every aspect of their organization.
Siemens’ automated luggage belts equipped with RFID readers can
move at up to 30 feet per second, which means that passengers
wouldn’t have to wait hours for their bags to show up at the
carousel as they often do now. Even though the people at McCarran
were helpful, their airport has less than half the traffic of
Hartsfield-Jackson. Perhaps consulting with the folks at Siemens
will help you better frame the issues for your massive operations.
Or maybe you’d be better off visiting Denver International Airport,
which is known for its notoriously flawed—and inefficient—automated
baggage handling system.
Additional information gathering at Siemens’ mock airport is a
good idea, but who do you send? Identify how many and which type of
managers to recommend for a fact-finding team and to tour the
facility at Furth, Germany?
Do you implement RFID at Hartsfield-Jackson immediately, or do
you schedule a trip to Furth, Germany before deciding? Or do you
decide not to implement RFID at all? Why or why not?
What a trip! You are exhausted from changing planes (three times
because of cancellations) and trying to corral your colleagues as
well as their luggage. And after all the cramped seats, complaining
travelers, long lines, and marginal food, your team still has not
come to a decision about what to do—at your own airport.
Last month, you and your management team from Hartsfield-Jackson
Atlanta International Airport began discussing using
radio-frequency identification (RFID) tags in the airport’s
baggage-handling operations. Recent reports on lost luggage have
caused more than a ripple of concern, with roughly one in every 150
U.S. passengers losing a bag in any given year. U.S. airlines spent
an estimated $400 million to replace mishandled luggage in a recent
year, yet passengers are regularly incensed that the airlines give
only partial reimbursements for lost bags and belongings. The cost
of lost luggage, however, is not just the $400 million in
reimbursements. There’s the time and expense of staffing large
customer-service departments to take complaints, process claims,
track down and identify missing baggage, and deliver found bags to
either the owner’s travel destination or home. Multiple deliveries
are often made, as the bag arrives at the passenger’s destination
after he or she has left for another destination or returned home.
The International Air Transport Association estimates that airlines
worldwide could save $760 million a year by reducing lost
luggage.
Your team would love to reduce the costs associated with lost
luggage at Hartsfield-Jackson (ATL), which consistently wins the
title of world’s busiest passenger airport. Nearly 6.5 million
travelers pass through the airport in a given month and bring about
75 metric tons of luggage with them. That is more than the monthly
amount of mail or commercial freight (think FedEx and UPS) that
passes through the airport’s facilities!
Thirty-one airlines take off and land at ATL, but Delta accounts
for over 58 percent of passenger volume. As (bad) luck would have
it, Delta has a dismal ranking for lost luggage, reporting 6.8
mishandled bags per 1,000, second only to US Airways’ 7.7 losses
per 1,000. Company-wide, Delta handles 1.3 bags per passenger, and
there is no reason to think this number is any lower in Atlanta,
its biggest hub. That means Delta alone puts over 160,000 bags into
the ATL system each day!
To manage this tremendous flow of personal belongings, ATL uses the
bar-coding system in use at the majority of U.S. airports. Adhesive
paper tags are very economical at 4 cents each, but they also rip,
smudge, get misread, or get torn off completely. Scanners even have
trouble with twisted tags. Baggage sorting with bar-coded tags is
only 80 to 90 percent accurate. And once they are printed, that is
it. If a passenger’s destination changes due to, say, inclement
weather, flight cancellations, or being rerouted, the bar-code
label cannot change to reflect the new itinerary.
Armed with all this, well, baggage, your team went on a trip to Las
Vegas’s McCarran International Airport, which has been using
radio-frequency identification tags to manage its bag handling.
McCarran is the fifth-busiest airport in the United States, and it
handles more than 70,000 outbound bags per day. Using bar-code
readers, as many as 7,000 bags per day were not read properly and
tossed into an “unknown” pile to be hand-sorted. There was also the
headache of lost luggage for passengers on quick three- and
four-day excursions to consider. In the end, the airport decided to
invest in a system based on RFID tags. Tags costs 21 cents apiece,
or five times the cost of a bar-code tag, but the accuracy of the
RFID system has cut the number of hand-sorted bags by 90 percent,
and the tags can be rewritten electronically mid-travel if
itineraries change. The RFID system has enabled the airport to let
inbound passengers on long flights check their bags all the way to
their casino or hotel so that their luggage is waiting for them
when they arrive.
What to do? ATL is already in the middle of a $5.4 billion campaign
to improve facilities. Management does a great job managing the
finances of the airport, and Hartsfield Jackson is considered a
good risk (meaning a safe bet) for lenders. The hardware required
to start using RFID is cheaper than maintaining the hardware that
manages the system of traditional bar-code tags, but the difference
in the cost of the tags is substantial if decreasing. And who’s
going to foot the bill? Should the airlines, which are nearly all
suffering financially, be expected to pay for the program that will
ultimately benefit them as well? Delta already stopped paying its
$3.4 million annual rent to the airport as part of its bankruptcy
restructuring. If they don’t pay for the hardware required to read
the tags, should airlines at least pay for the tags
themselves?
Maybe you need to take another trip, this time to Furth, Germany,
where Siemens, a provider of industrial software, has built a mock
airport to demonstrate how automated technology can help airports
improve efficiencies in nearly every aspect of their organization.
Siemens’ automated luggage belts equipped with RFID readers can
move at up to 30 feet per second, which means that passengers
wouldn’t have to wait hours for their bags to show up at the
carousel as they often do now. Even though the people at McCarran
were helpful, their airport has less than half the traffic of
Hartsfield-Jackson. Perhaps consulting with the folks at Siemens
will help you better frame the issues for your massive operations.
Or maybe you’d be better off visiting Denver International Airport,
which is known for its notoriously flawed—and inefficient—automated
baggage handling system.
Additional information gathering at Siemens’ mock airport is a
good idea, but who do you send? Identify how many and which type of
managers to recommend for a fact-finding team and to tour the
facility at Furth, Germany?
Do you implement RFID at Hartsfield-Jackson immediately, or do
you schedule a trip to Furth, Germany before deciding? Or do you
decide not to implement RFID at all? Why or why not?