Nov 1, 2006 12:00 PM, By Merrill Douglas

Airline industry hopes to slash costs associated with missing luggage

In Las Vegas, airport officials already have placed a big wager on RFID, moving well toward their goal of using the technology to sort and track 100% of outbound bags. “I would say we're in the ballpark of the 50% mark, maybe a little beyond that,” said Samuel Ingalls, assistant director of aviation, information systems at McCarran International Airport.

McCarran has taken over responsibility for baggage sorting from its airline tenants. As part of a major project to construct six new buildings on the property, including a new baggage-handling infrastructure, McCarran is implementing an RFID system. The first tags with embedded chips started rolling past readers a little more than a year ago. As of late September, the RFID system was handling bags for five airlines. Because the list includes the airport's largest carrier, Southwest Airlines, the five together account for about half of McCarran's outbound passengers.

Although the progress of the RFID implementation hinges on the pace of the overall construction, officials at McCarran expect to complete the implementation soon. “If not right around the turn of the year, then in the first quarter of next year we should, roughly, have everything online,” Ingalls said.

The airport originally contracted with Matrics to supply the RFID hardware, chips and baggage tags. But Symbol Technologies acquired Matrics in 2004, and this September Motorola announced its intention to acquire Symbol for nearly $4 billion (MRT, October 2006, page 8).

Ingalls agreed that RFID chips are more expensive than he'd like them to be. “However, when we looked at the cost versus the benefit, we found that it was at least a break-even situation, if not better, right now. And as the chip price drops in the future, then we and our carriers will realize some significant benefits,” he said.

Another point in favor of RFID is that installation costs are “magnitudes less expensive” compared with an optical system, according to Ingalls. Bar-code readers used in luggage-handling systems involve “little optical laser beams positioned all over the place. It looks like kind of a laser beam city,” he said. They also need constant maintenance because a coat of dust on the lens can degrade the read rate, and that upkeep adds to the cost. “An antenna doesn't really care if it has a coat of dust on it. It keeps doing its thing.”

Before the August restrictions on liquids in carry-on bags, when the volume of checked luggage shot up by 30% to 40%, McCarran was handling 70,000 bags a day, Ingalls said. If an optical system achieves 90% accuracy, that still means employees must deal with 7000 bags per day by hand. McCarran's RFID system is about 99% accurate, he said. At that rate, employees would have to handle about 700 bags a day.

“We felt that was a pretty significant factor in weighing against the cost of the chip itself,” Ingalls said.

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