Baggage theft punishes airlines

By Leon Engelbrecht for SITA
Johannesburg, 13 May 2008

Airlines and airports are working together to study the science of baggage handling in order to reduce the number of bags that go missing, costing the industry hundreds of million of dollars every year, says a new report by SITA, the airline IT company.

The report says 98% of the 2.25 billion items of luggage checked in at the world's airports arrive at the right time at the right place. But the remaining percentile still amounts to 42 million bags, passenger frustration and $3.8 billion in fines.

"But while 98% is a good success rate for a process as complex as baggage management, it's not good enough - especially if you're the one waiting for bags which don't arrive," says SITA CEO Francesco Violante. "Unfortunately, with growing passenger traffic and increased airport congestion, success rates aren't going to improve unless active steps are taken by airlines and airports."

The situation is much the same in SA. Public enterprises minister Alec Erwin last month said SAA handled 384 187 bags in February 2008, of which 1 978 disappeared, 778 were damaged and 393 were reported pilfered from. This comes to 3 149 bags, and amounts to about 1% of the total.

British Airways, for its part, told The Star newspaper about 26 bags per 1 000 customers - 2.6% ‑ "fail to travel as planned" - but "the vast majority" of passengers are reunited with their luggage within two days.

Violante says SITA is working closely with the International Air Transport Association (IATA) to address the problem.

The SITA 2008 Baggage Handling Report punts radio frequency identification (RFID) as a solution along with "fully integrated end-to-end systems, which include improved tracking and reconciliation". The report's authors expect RFID to entirely replace bar-coding as it is more efficient.

"It is important that we continue to move towards a comprehensive, fully-integrated global baggage management system that can direct, track and trace passenger baggage throughout the entire journey from check-in to final delivery at the destination," Violante says of the report.

IATA, in its "RFID Transition plan for baggage management", estimates that only in the first year of implementation would costs outweigh savings for the air transport industry, with solid gains being posted thereafter - amounting to annual savings of $200 million when RFID is implemented for baggage processing at 80 key global airports, and over $700 million per year with full RFID implementation industry-wide.

As increasing numbers of RFID tags are used by the industry, the price per tag will inevitably tumble. RFID specialist consultancy IDTechEx says 25 million tags were delivered to airports and airlines in 2006, at an average price of 20 US cents a tag. They say this will rise to 75 million tags in 2008, a billion in 2012, and two billion by 2018. At the same time, the unit price is likely to drop to 15c in 2012 and just 5c in 2018.

IDTechEx also says that part of the infrastructure cost is cheaper with RFID than with traditional bar code systems - with a 360-degree bar code reader costing $60 000 compared to an RFID portal at $20 000.