GAINING EFFICIENCIES IN BAGGAGE HANDLING

By Nathan Sims and Art Masri, Vanderlande

To reduce instances of mishandled bags, IATA is now requiring RFID tagging. This, combined with innovative individual carrier solutions, can bring more efficiency to airlines and airports.

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IATA BAGGAGE INITIATIVE

The aviation industry continues collaborating to improve baggage services. The International Air Transport Association (IATA) Board of Governors, for example, unanimously adopted Resolution 753 to deploy radio frequency identification (RFID) inlays in all baggage tags. This means airlines will start transitioning from barcode-only tags to tags that include RFID inlays, resulting in more accurate real-time tracking of passenger baggage via upgraded equipment in the baggage handling system.

This will provide a complete account of all transactions throughout the baggage journey. The industry recognizes the value of RFID tracking as evidenced by early adopters at McCarran International Airport in Las Vegas, Hong Kong International Airport and Delta Air Lines’ systemwide deployment. Thus, regardless of your role within the baggage ecosystem, the proposed RFID initiative will impact some aspect of how bags are tracked throughout the journey.

While the collective undertaking to implement RFID at this scale is massive, so are the anticipated benefits of reducing baggage mishandlings while increasing tracking visibility operationally and through passenger-facing mobile apps. Historically, airlines had difficulty making the RFID business case, because the cost per tag was exponentially more than paper tags. In recent years the cost per tag has fallen and while it is still higher than paper the gap will continue to narrow as more bag tags are printed. Furthermore, individual carrier system (ICS) technology provides similar benefits — including enhanced tracking — without having to invest in RFID bag tags.

In this sense, both conventional conveyors and ICS can use RFID as a technology beneath the surface to bring more information out of baggage handling and reconciliation systems to create increased value. However, to achieve end-to-end tracking across the entire journey — from passenger divestment to repatriation at the final destination — airports and airlines should consider deploying both RFID tags and ICS together.

ICS ADVANTAGES

ICS is a high-speed baggage conveying system that delivers excellent process control and low operational costs by conveying bags in individual carriers, or totes, as opposed to the current norm of using belted conveyors. Bags loaded in carriers are transported smoothly through the system and combine high capacity with faultless tracking via an embedded RFID chip. This makes the system beneficial at every stage of the baggage handling process as airports, airlines and authorities such as TSA and CBP can gather reliable and consistent data throughout the baggage journey. ICS technology has been offered for more than 20 years at Asian and European airports and is now being implemented at airports in the United States.

ICS offers many advantages over a conventional conveyor system. For the purpose of this paper, the top three benefits will be discussed.

First and foremost is the ability to achieve 99.99% tracking via the embedded RFID chip in each tote. This advantage means that no bags are lost in the journey and that TSA can positively track any suspect bags through secondary screening with a higher degree of certainty over a conventional baggage handling system.

Second, while the controls system for an ICS is more complex and robust than a conventional system, the physical operations and maintenance (O&M) of an ICS is significantly simpler. This is because ICS involves sewer components, which are easier to service, and bag jams are virtually nonexistent considering that all bags are placed within universally sized totes. Due to its modular design and simplified O&M requirements, ICS delivers robust and reliable product performance, achieving up to 99.99% reliability.

Another key benefit is the ability to store early bags in an automated storage and retrieval system configuration. This provides another layer of control to peak shave resources by accumulating bags by flight and releasing all bags together based on business rules. Peak shaving gives system operators the ability to maximize utilization of sort devices and increase ground handler productivity. This an example of how ICS is designed with green principles in mind to conserve energy by running on-demand versus conventional conveyors running for predetermined periods using preset timers to shut down.

THE ECONOMICS OF ICS

A baggage handling system is a living and ever-changing piece of infrastructure. As the airport grows, so will its system. By considering the potential costs of expansions or upgrades, a more complete picture can be provided. In order to properly communicate the costs and benefits of deploying ICS, it is imperative that the original equipment manufacturer develop a Total Cost of Ownership (TCO) study tailored to each airport to analyze conventional conveyors against ICS. When evaluating the whole life cost of a baggage handling system, stakeholders should consider both capital and operating expenditures.

SYSTEM DELIVERY COSTS (CAPEX)

Costs associated with delivering a fully functional baggage handling system are estimated in a high level of detail. Two main considerations drive the estimation of the project cost: project management and engineering, and material supply and site work.

CAPEX ANALYSIS

  • Project management and engineering: The flexibility and increased functionality that ICS provides as standard comes at a cost. Higher use of software and IT technology means more labor is required to develop those systems, and more management is needed to steer that development. Belted conveyor is less complex and requires fewer resources to design and develop the system.
  • Material supply and site work: Conventional conveyor technology utilizes designed-to-fit conveyors to put the system together piece by piece. This means that production, delivery and installation must be very closely managed and monitored for a successful installation. Some systems are prefabricated, allowing assembly on-site as needed on by standard components. This saves on both manufacturing costs and installation costs.

SYSTEM OPERATIONS AND MAINTENANCE COSTS (OPEX)

OPEX costs are any costs associated with operating and maintaining a baggage handling system over the life of the system. These costs are driven by four main considerations: service and maintenance approach, spare parts, missed bag rate, and energy.

OPEX ANALYSIS

  • Operations vs. maintenance: The biggest trade-off between conveyor and ICS technologies is how they are operated. Fewer unskilled operational laborers are required for ICS technology, which eliminates most jams. ICS requires more IT and controls operators due to the IT-focused nature of the technology. Finally, the flexibility of the ICS design leads to a higher drive motor count for the system. This means more effort is required in the maintenance regime and schedule.
  • Spare parts: The standardized nature of ICS means that there are fewer components to manage, and at a lower cost, as compared to the conventional conveyor system. Based on data from the ICS installed base around the world, the rate of spare parts consumption growth as the system matures is also lower, leading to substantial life cycle cost savings.
  • Baggage handling system-attributable mishandled bags: The number of bags that do not reach their destination in the required time to make their flight are considered mishandled bags. Mishandled bag rates have been estimated based on field experience operating these types of systems. A value of $125/ bag is used to see the impact of performance of the system.
  • Energy costs: These costs to the airport can be established and forecasted utilizing information about the system including drive count, size and daily run time. $0.09/kWh is used as a baseline cost.

MAKING THE CASE FOR RFID

Tracking the movement of bags using RFID technology to decrease mishandlings is a high-value use case. IATA’s business case estimates the use of RFID tagging to yield a return on investment of over $3 billion to the industry.

Let’s break it down to see if RFID can realize the estimated ROI. IATA anticipates RFID to be fully implemented by member airlines within four years, which means payback will be gradual over the next several years. IATA assumes end-to-end tracking will decrease mishandled bags by a quarter, resulting in approximately $575 million savings.

Missed bag rates are down 70.5% over the past decade before RFID, so it seems grandiose that RFID tracking alone can have such a significant impact. However, substantial cost benefits are associated with more economical maintenance, reducing flight delays, easing adoption of Resolution 753, and labor associated with scanning bags multiple times throughout the journey. By automating bag scanning function performed by airlines and contract ground handlers it ostensibly increases productivity, improves worker safety by reducing risk for injury, and can optimize staffing.

SUMMARY

Aging infrastructure and growth are driving the modernization of baggage infrastructure. Whether planning, designing or constructing a new terminal — or merely recapitalizing existing systems — there is a need to utilize RFID. For example, airlines and airports can implement RFID on existing conventional systems today, yielding improved tracking and visibility. However, ICS owners and end users will reap the added benefits of better system reliability, increased throughput, faster connection times to reduce missed bags, and potentially lower TCO.

RFID tags are a fascinating example of how the “internet of things” can reduce bag mishandlings. It could be argued that IATA’s new RFID inlay requirement will potentially bring benefits to all systems regardless of type, allowing an airport to increase bag tracking throughout the journey. This is the intent from a global perspective for IATA: Make an impact across the whole industry rather than a single airline or airport perspective.

By rolling out standards for both RFID and modern baggage messaging, the airlines are working toward true interoperability — aiming to improve the transfer process, which is the most significant driver for mishandling bags. We can all agree our collective objective is to reduce the number of missed bags and associated costs while improving the passenger experience, and RFID tracking is a step toward reaching that goal.

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