Investor's Business Daily, March 19th, 2007
Rules enacted after the 9/11 attacks are forcing fliers to check more bags into the cargo holds of planes rather than carry them onboard.
As more bags get checked, more items are bound to get lost. In January, U.S. airlines reported 8.2 mishandled bags per 1,000 passengers. That's 383,583 misplaced bags in one month, or an 18% increase from the year before.
"This problem is growing with greater airport security," said Robert Foppiani, an analyst with ABI Research. "People are being forced to check more baggage, and that costs more money."
Transportation experts are betting on one possible solution: baggage-handling systems that use radio-frequency identification chips, or RFID, to track luggage. Las Vegas McCarran International Airport and Hong Kong International Airport have already adopted such systems, and others are looking into the wireless technology.
Las Vegas wanted to improve customer satisfaction for its many visitors. To do that, the airport needed a more efficient system to return bags to airlines after they had been screened for explosives.
They viewed radio tags as the best approach to sort the roughly 75,000 bags moved each day by the airport's 28 carriers, says Randall Walker, director of aviation for the Las Vegas Airport. Standard bar code tags were too faulty, with a failure rate of 10% or more.
"There had to be a more efficient way to get bags back to the right carrier," Walker said. "We needed to automate baggage screening for greater efficiency, and RFID is safer than a manual system."
As a result, the Las Vegas Airport installed six nodes for RFID baggage sorting. The tags and reader devices come from Motorola MOT, which acquired RFID vendor Symbol Technologies for nearly $4 billion in January.
The airport's new system went live in September 2005.
The RFID labels are applied to bags much like bar code tags. But RFID tags rely on radio waves to transmit information about the luggage to readers. The information is stored in a central data hub built by database software king Oracle ORCL.
Unlike bar codes, radio tags can be scanned from several feet away. The readers can also pick up multiple RFID tags at the same time, thus speeding the process.
Once the bags are scanned for explosives, they can be sorted by RFID readers at the nearest node. Then they're sent by conveyor belts to the carriers. With readers that are 99.5% reliable, the new system has greatly improved the accuracy of baggage handling, Walker says.
"Over time, I'm optimistic that this technology will be widely used for air travel," he said. "It took years for bar code systems to evolve and catch on."
The Hong Kong Airport, meanwhile, uses RFID to streamline baggage routing between connecting flights. That's an important concern for Hong Kong, which serves as a major transfer point 15r much of Asia, Foppiani says.
"As a big hub for that region, it can get pretty messy with all the loose baggage from stopover flights," he said.
Still, most airports and airlines have not yet invested in RFID.
Replacing current bar code systems will likely prove expensive. RFID tags run about 20 cents each, on top of the initial costs of installing signal readers and software.
Industry watchers expect wider adoption to bring down the cost of RFID tags in the future.
Air France and several airlines in South Korea have launched pilot projects. Other airlines in the U.S. have run smaller tests with RFID. Some are exploring RFID to track equipment and spare parts.
The biggest benefits could come when all airports convert to RFID baggage systems. At that point, all bags could be traced on both arriving and departing flights.
"Most airports are still on the sidelines watching the results of the early adopters," said ABI's Foppiani. "We'll reach critical mass when all the major airports make some significant adoption so they can achieve the full benefits of RFID."
Global revenue from RFID baggage systems should grow 18.5% per year to $27.5 million by 2011, compared with $11.8 million last year, according to ABI Research.
Copyright 2007 Investor's Business Daily, Inc.
