Airclic in The News
WINNING THE Baggage Battle
AMID ONE OF THE DARKEST FINANCIAL periods in airline industry history, there is one positive trend about which carriers can boast: The number of mishandled bags appears to have dropped considerably over the past two years. “Losing” luggage long has been one of the industry’s trouble spots, leading to added expense and a widespread belief that airlines are incompetent baggage handlers.
While it may take some time for that perception to recede, the numbers show that the industry is getting better at managing baggage. According to SITA, mishandled bags globally lowered by around 30% through the first three quarters of 2009 compared to the same period in 2008. That improvement is even more impressive when one considers that mishandled bags fell 22.6% from 42.4 million in 2007 to 32.8 million in 2008. SITA said the decline in lost luggage saved the industry an estimated $800 million in 2008. Other surveys and reports, including statistics from the US Dept. of Transportation, confirm the positive trend.
But the baggage handling problem is far from solved, warns Andrew Price, head of IATA’s Baggage Improvement Program. “There’s still a lot to be done,” he tells ATW. “In 2008, the global industry lost around $3 billion [owing to mishandled luggage]; $3 billion in costs in an industry that is cost-challenged constantly is certainly something to look at.”
There is no consensus on why handling has improved. Most obviously, traffic is down, meaning fewer passengers, fewer bags and less chaos at airports. Airlines and airports also have invested in new baggage handling technology that may be playing a role in the improved performance. And then there is the widespread imposition of bag fees, which discourage passengers from checking luggage and provide more advance notice of how many bags will be checked per flight.
“My guess is that [the improvement] has to do with all of that,” SITA VP-Airport Services Catherine Mayer tells this magazine. Price adds, “The industry is certainly putting a huge amount of effort and a lot of investment into baggage handling, and it needs to. The process should be as smooth and painless as possible.”
Bag Tracking
The “process” is indeed critical. Baggage handling involves numerous steps and multiple handoffs; at any point a lapse could lead to a lost bag. IATA has been visiting major airports around the world with experts spending a week studying and auditing baggage handling at each facility and then making suggestions to airlines and airport operators on how to improve the process.
“We look at everything from the check-in desk to the ramp, the transfer area, the arrival area, everything,” Price says. More than 15 airports have been examined so far, among them Sydney, Nairobi, Dubai, Lisbon and Dallas-Fort Worth. No part of the process is considered trivial.
“One of the main difficulties in the baggage performance analysis comes from the fact that a mishandling can actually be due to the accumulation of minor issues along the whole process,” IATA stated in a recent report on the program. A bag must be tagged correctly, loaded on the right flight, unloaded properly, transferred to another flight if necessary (the point at which most mishandlings occur) and then managed at the arrival area.
To limit mishandlings, IATA has concluded that “recording data along the baggage chain, preferably in an automated way,” is critical. First, it gives airlines a better idea in real time of where bags are. Secondly, it provides statistics on baggage performance that allow carriers and airports to analyze continually what is and is not working.
How can bags be tracked accurately? For many years the industry has been talking about employing RFID, and various airports and airlines continue to engage in trials. Last year, a Star Alliance program involved issuing RFID baggage tags produced by Siemens to 1,000 United Airlines frequent flyers who regularly fly out of Chicago O’Hare. The trials mostly focused on scanning the RFID tags to speed the baggage drop-off process at check-in counters. Tracking the bags through their journey was difficult owing to a lack of RFID infrastructure at most airports.
RFID is “still not widespread,” Mayer says. “There are only a handful of airports right now that have the equipment. The real benefits of RFID will come when it’s adopted across an airline’s entire network.” But cost and standardization continue to be major stumbling blocks.
Even without RFID, the increasingly self-service-reliant check-in process is causing airlines to consider strongly, or even begin to implement, self-bag-tagging. SITA projects that by 2013 about half of the world’s airports will be equipped with self-service kiosks capable of printing bag tags.
SAS last year rolled out self-bag-tagging at Copenhagen, Oslo, Arlanda, Lulea and Ronneby. It explains that a passenger checks in via the Internet, text message or cell phone and upon arrival at the airport swipes a credit card in a kiosk that asks how many bag tags are needed. The tags are printed along with instructions for properly attaching them to baggage. The passenger then takes the tagged bag(s) to a drop desk. Lufthansa also began rolling out self-tagging on a limited basis last year but has acknowledged difficulties arising from passengers not attaching the tags correctly.
Self-bag-tagging “has been a topic of discussion for the last five or six years in the industry,” US Airways MD-Customer Strategy and Planning Tim Lindemann says. “There are challenges in teaching the customer how to tag the bag appropriately. And the tag has got to be on pretty tight.”
Southwest Airlines VP-Ground Operations Teresa Laraba points out that self-tagging is not allowed in the US. “The TSA requires a customer service agent [from an airline] to tag the bag,” she says. “We are very interested in watching how the [self-bag-tag] debate progresses and would like to participate in a test program . . .It would be a little more complicated, but we want to try it if given a chance.”
SITA found in its 2009 Passenger Self Service Survey (ATW, 10/09, p. 39) that there is a “low level of adoption” for this option: More than 75% of passengers surveyed said they had never printed a bag tag from a kiosk. But IATA and SITA both believe self-tagging increasingly will become an important element of the baggage handling process.
They note that common-use bag-drop counters would be a strong complement to self-bag-tagging. SITA and Swissport last year deployed the world’s first such solution at Zurich, allowing passengers from multiple airlines to use the same queue. Eleven Star carriers use 10 common-use counters at the airport, where the departure control system employs SITA’s PassengerBagdrop software. Star says common-use bag drop at ZRH helped reduce processing time to fewer than 30 sec. per passenger. “It has gone very smoothly,” Mayer says. “Passengers are very receptive. They go straight to the counter with the fewest number of people.”
With RFID still at least several years away, some airlines are taking a cue from express cargo operators such as FedEx and UPS and are deploying handheld scanners along the baggage chain. US’s mishandled baggage rate decreased by 45% in 2008 compared to 2007 and then by another 38% in 2009. “We attribute about 40% of our improvement to reduced volume, but about 60% [is owing] to changes we’ve introduced to the process,” Lindemann says, citing the “tremendous improvement in the way we handle bags on the ramp.”
US last year equipped its ramp agents with handheld scanners produced by Intermec that capture information from bag tags’ barcodes and instantly send the data to the airline’s IT system. “We’re connecting all of the dots in terms of providing information from ramp-side to the [airline's] baggage service office,” he says. “We’re improving delivery of bags in the first place and then reducing the amount of time it takes [to connect a misplaced bag to a customer]. We’ve streamlined the whole process. We used to print off a sheet about 45 minutes before a flight’s departure with information on the bags [subsequently used by ramp agents who checked off bags on the sheets as they were loaded]. Now we have real-time, plane-side information.” He says US is considering making the information available to passengers so they will know where their bag is at all times.
Southwest is using handheld scanners produced by AirClic at the other end of the process, scanning the tags of unclaimed bags to identify them more quickly. “It has helped us to get bags back to the customer faster,” Laraba says. “We don’t have employees spending literally hours writing down the tag number and then going into the back office and entering it manually and trying to figure out where it goes.” She says the scanners have improved baggage return time by 4-8 hr. on average. “We’re delivering more on the same day rather than the following day,” she notes.
Raising Fees
One reason airlines may not be getting credit for improved baggage handling is that the public is focused on, and grumbling about, bag fees. In 2006, Flybe Chairman and CEO Jim French made a bold decision: Europe’s largest independent regional would charge passengers £2 per checked bag per flight segment for advance check-in and £4 for airport check-in. “For the first time passengers checking bags . . . will pay for the service they use rather than the cost being unfairly spread across all people on the aircraft,” he said in announcing the fees, which were an industry first.
Not long after, Ryanair, Aer Lingus and Norwegian followed suit. In March 2007, Spirit Airlines became the first US carrier to impose the fees, charging $5 for each of the first two bags for online check-in and $10 for airport check-in. In retrospect, those fees seem quite innocent: In January, American Airlines, Delta Air Lines, Continental Airlines, US Airways and United Airlines all raised their fees to $25 for a first bag and $35 for a second bag, with DL charging $23 and $32 even if the passenger checks in online.
The charges are major revenue generators, helping to offset weak yields. According to the US Bureau of Transportation Statistics, the 10 largest US airlines generated $739.8 million from checked baggage fees in the third quarter of 2009, more than double the $350.1 million they earned from baggage fees in the prior-year period. They earned $7 per passenger from the fees in the third quarter, BTS reported. DL, AA and US each generated more than $111 million from the fees during the three-month period.
US says its passengers are checking 20% fewer bags compared to before the fees were put in place. “Prior to the fees, certain customers checked bags just because they didn’t want to deal with” carrying them onboard, Lindemann tells this magazine. Now they carry them, lowering system stress, he explains.
SJ Consulting President Satish Jindel advocated for carriers to charge passengers for baggage several years before the industry began widely imposing fees, arguing that they were doing for free–handling and carrying heavy pieces over long distances–what FedEx, UPS and DHL did for high rates (ATW, March 2007, p. 24). “I’m glad they’re finally charging for bags, but not in the way they’ve gone about doing it,” he says. He asserts that the fees “in no way reflect the cost of the service being provided . . . $30 is still half the price of what UPS or FedEx would charge.”
The industry did a “lousy job” of rolling out the fees, he says, adding that airlines “should have figured out what it really costs to transport the bags and then told the public exactly what that cost is . . . They could have said, ‘Here’s our charge, say $40-$45 [per bag], and it’s $15 less than what FedEx would charge and these fees will help keep our fares down’ . . . The industry does a very poor job of educating the public of the value of carrying bags.” Thankfully, it is doing a much better job of delivering them at the end of the journey.
