Trifter

Introduction

The IATA (the International Air Transport Association – the industry’s global trade organization, representing a trade association that representing 265 airlines, or 95 percent of the world’s air carriers) – has embarked on a major, industry-wide initiative to streamline the workings of the airline industry world-wide, while enhancing customer service. The goal of the IATA’s “Simplifying the Business” initiative is to save air carriers $6.5 billion in annual costs through the effective use of technology in five focal areas, one of which is the use of RFID (radio frequency identification) to simplify airline logistics management in baggage handling and other applicable areas. Yet, while the need for RFID-based visibility and control systems in the airline industry is greater than ever today, the pace of actual, demonstrable change at the world’s airports is frustratingly slow, especially in light of the economic downturn.

Airport Infrastructure Lagging

Why? The answer is multifaceted and complex. First, the world’s leading airlines have been buffeted by extreme turbulence, given the “perfect storm” of a global economic slowdown and higher fuel costs, combined with the escalating threat of air-based terrorism. The economics of the industry thus remain shaky at best, evidenced by the bankruptcies and forced combinations of several of the world’s largest air carriers. However, explosive growth continues to occur in the industry. In fact, the IATA forecasts that passenger air traffic growth will largely come from low cost carriers around the world, who have grown in stature and market presence, from Southwest in the United States to Ryanair in Europe, and new entrants – both on the low and high-cost ends of the market – have been proliferating both in domestic and international markets. Yet, infrastructure investments in airports and their luggage handling capacities have not kept pace with today’s growth in air travel, let alone tomorrow’s. For instance, London’s Heathrow Airport, which has a designed capacity of 50 million passengers, today handles more than 70 million passengers annually.

Lost Baggage: A Customer Service Nightmare

Growth and security concerns have thus combined to exacerbate the baggage problems of the world’s airlines. Presently, in the United States, airlines lose (meaning they misdirect, mishandle or misplace) the bags of 4 out of every 1,000 passengers, meaning that on an average day, 10,000 bags are misdirected. This adds up to over 3.5 million problem bags a year. In Europe, the problem is even worse, with a rate of 12 lost bags per thousand passengers. According to a recent report from SITA, a Swiss-based airline-consulting firm, 1% of the 3 billion bags handled worldwide each year are considered “lost.” The proliferation of the “hub and spoke” route systems only aggravates the problem, as 61 percent of bags are lost in the process of making flight connections at a hub airport. Furthermore, the restrictions on carry-on items have not only inconvenienced passengers, they have placed further strain on the baggage handling systems for checked luggage.