Terrorism scares, rising fuel prices, and overall economic malaise have combined to damage airline companies’ bottom lines. In 2007, nearly every major airline began charging baggage fees to generate revenue. Travelers were already unhappy about the poor baggage handling service they received, but paying for often spotty and unreliable baggage handling service was one of the biggest sources of customer dissatisfaction throughout the industry.

To promote customer goodwill as well as reduce costs, airlines developed state-of-the-art baggage handling systems designed to drastically cut down on the number of bags delayed or lost. Statistics suggest these systems are working. Overall, the airline industry rate for lost luggage has improved by 38 percent over similar figures from two years ago, when nearly 2.5 million bags were lost or delayed.

Some of the improvement in the numbers of bags lost or mishandled is because passengers are bringing fewer bags to avoid baggage charges. But updated baggage handling systems have been the major reason for the improvement. Baggage handling systems must perform several key roles: they must move bags from the check-in area to the departure gate, move bags from gate to gate, and move bags from the arrival gate to the baggage claim. The systems must be both accurate and fast, and baggage should move from its current location to its destination faster than travelers can get there.

Baggage handling systems are among the most complex systems in the systems universe because they involve a wide variety of sensors, actuators, mechanical devices, and computers. These systems use over 3 million lines of software program code.

Some of the advanced technology used in baggagehandling systems includes destination-coded vehicles

(DCVs), automatic bar code scanners, use of radio frequency identification (RFID) tags, and high-tech conveyors equipped with sorting machines.

At check-in, fliers’ bags are tagged. The tags contain your flight information and a bar code that all of the computers in the baggage handling system can read. When computers in the system scan the bar code, they process the information it contains and determine where to send your bag. After being scanned once, the system always knows where your bag is at any point.

Bags are deposited into DCVs to transport them to gates quickly. DCVs are unmanned carts that can load and unload bags without stopping movement. These carts move on tracks like miniature rollercoasters along a “highway” that spans the airport. Computers throughout the system keep track of the location of each bag, its destination, and the time it is needed at that destination. The system can optimize the routes taken by the carts to get the bags needed most urgently to their destinations fastest Because DCVs move at high speed and do not come to a full stop to receive baggage, the conveyors must be extremely precise, depositing bags where they are needed at just the right time for maximum efficiency.

Once bags reach the gate, they enter a sorting station where airline employees use computer terminals to send bags to the correct plane. Increasingly, system vendors are turning to RFID tags attached to each piece of baggage rather than bar code tags. RFID tags are wireless devices that transmit their location and contents, and make it far easier to track packages than bar codes which are silent and passive. They are unfortunately much more expensive than simple bar code tags.

Baggage handling systems can be extremely expensive, but if implemented successfully, pay for themselves. Lost and mishandled baggage is a major expense for airlines, and reducing the incidence of lost and mishandled baggage creates significant yearly savings. According to the International Air Transport Association, a mishandled bag costs an airline, on average, \($100\), and the global, airline-industry price tag for mishandled baggage is \($2.5\) billion per year.

In 2007 US Airways lost nine bags for every thousand travelers. After implementing a new baggage handling system at its terminals, that figure dropped to three lost bags for every thousand travelers. US Airways spent \($16\) million on scanning technology and other associated costs of their baggage handling system, but the company says the system now saves \($25\) million per year and has boosted customer satisfaction.

In 2007, Delta Airlines emerged from bankruptcy to overhaul many of its outdated systems, including its baggage handling system. Between 2008 and 2010, Delta installed optical scanners to read baggage tag bar codes, widened and extended its system of baggage conveyor belts, and installed a central control room to monitor conveyor belts and baggage carousels in Atlanta and most of its other airport terminals.

The airline recorded a top-notch baggage handling record of just 2.93 mishandled bags per 1,000 passengers.

Bags now take less than 10 minutes to travel from terminal to terminal — a process that took as long as 30 minutes with the older system. In 2011, Delta added a service that allows passengers to track their checked bags from scanning at check-in, to the flight they're loaded on, and then arrival at baggage claim.

New baggage systems are not flawless. In July 2010, a software glitch shut down the baggage handling system at an American Airlines terminal at JFK airport. A piece of software failed in the bar code scanning device, forcing airline employees to sort luggage by hand, delaying some flights and causing a luggage pileup at the ticket counter. The largest baggage system modernization program failure occurred at the Denver International in the period 1993–2005. After spending \($250\) million, the airport authority finally abandoned the effort and returned to older manual methods, which have slowly been upgraded by 2011.

The system itself was not a trivial undertaking with 4,000 vehicles, 5.5 miles of conveyors, and 22 miles of track. The Denver failure provided important lessons for system modernization programs that followed, and overall, better baggage handling technology is greatly improving service for flyers.

CASE STUDY QUESTIONS

1. What types of transactions are handled by baggage handling systems?
2. What are the people, organization, and technology components of baggage handling systems?
3. What is problem these baggage handling systems are trying to solve? Discuss the business impact of this problem. Are today’s baggage handling systems a solution to this problem? Explain.
4. What kinds of management reports can be generated from the data from these systems?

MIS IN ACTION

1. Do a search on “airline baggage handling technology” and identify suppliers of baggage handling systems to the airlines industry. Choose one supplier and describe how its systems work. How are they different from the systems described above?
2. Go to ibm.com/luggage and watch the video case study of the IBM baggage handling system installed at Schiphol Airport in Amsterdam. The video claims that Schiphol’s system is the most advanced in the world. Review this case and discuss whether or not this claim is justified.
3. One of the largest baggage system modernization program failures in history occurred at the Denver International Airport in the period 1995–2005.
Do a search on “Denver baggage system failure”
and write a brief report on why this project failed.