Madalyn Ruggiero  /  AP
Nearly 1 percent of all luggage worldwide is lost or mishandled, costing the airline industry an estimated $2.5 billion a year.
By contributor
updated 10/13/2006 4:25:10 PM ET 2006-10-13T20:25:10

The next time you fly out of Las Vegas, your luggage might contain a 20-cent computer chip — a device that could revolutionize the way airline baggage is tracked and increase the odds of being reunited with your bags at the end of your trip.

The chip is part of a high-tech baggage system known as radio frequency identification, or RFID, that some officials hope will help solve a mishandled luggage problem that costs the industry $2.5 billion a year — and growing.

As the number of bags lost or delayed by airlines continues to rise, airlines and airports like McCarran International in Las Vegas are studying RFID as a possible solution for lost and misplaced luggage.

“I don’t want to say the world’s problems are going to be solved with this, but it will definitely have an impact,’’ said Samuel Ingalls, McCarran’s assistant director of aviation, information systems.

Keeping track of billions of pieces of passenger luggage, a process currently based on bar-code technology, has been especially challenging for the nation's cash-strapped airlines in light of a record numbers of travelers, new security regulations and cost-cutting measures.

A Transportation Department report last week on airline performance for 20 carriers showed the number of mishandled bags by airlines climbed sharply in August. For every 1,000 passengers, 8.08 bags were reported lost or delayed, up sharply from July’s rate of 6.5 and the August 2005 rate of 6.4.

Most of the major airlines, including United, Delta and Southwest, blame the trouble on record traffic and an increase in checked baggage because of the mid-August ban on liquids and gels in carry-on luggage.

SITA, a Switzerland-based technology provider that tracks baggage information for airlines and passengers in 220 countries, says the world’s airlines mishandled about 30 million pieces of luggage last year, or about 1 percent of the bags checked by two billion passengers. Dealing with mishandled luggage costs the global industry about $2.5 billion a year.

The International Air Transport Association says airlines and airports could save $750 million annually by using radio tags on luggage.

But Barbara Beyer, president of Avmark Inc., a Virginia-based aviation consulting firm, says airlines could save even more by simply upgrading their “Neanderthal” approach to baggage handling with more practical, less expensive, scanning devices.

“The airlines literally are still living in the 1940s,’’ Beyer said. “Baggage bar codes went out with the high-button shoes (for) everybody but the airlines. They need to get into 21st century technology.”

High-tech baggage systems don’t always work. Denver International Airport’s attempt at a fully automated cart-based baggage handling system failed miserably, causing a 16-month delay in the airport’s opening in the mid-1990s. United Airlines finally scrapped the system last year.

Other airports have tested RFID technology but so far McCarran and Hong Kong International Airport are the only airports with large-scale tagging programs.

Much of the testing of the new technology was prompted by a post-9/11 federal law that requires all checked baggage to be scanned electronically. The Transport Security Administration has conducted several RFID tests with U.S. carriers and is paying for about 75 percent of McCarran’s $125 million baggage management system, $25 million of which went for the individual computer chips.

While RFID technology appears promising, most airlines and airports are reluctant to ditch bar-coded luggage tags for computer tracking chips.

Atlanta-based Delta Air Lines has been eyeing the RFID technology for years and even committed up to $25 million in 2004 to implement the system. But the airline’s bankruptcy filing in September 2005 put those plans on indefinite hold. When Delta initially announced plans to install RFID technology, it said the new system would dramatically cut the $100 million it was spending annually to deal with luggage mistakes.

“It’s a project that we believe is worthwhile,’’ said Delta spokesman Anthony Black. But he said the airline wouldn’t be in a position to even consider it again until after it emerges from bankruptcy.

American Airlines spokesman Tim Wagner said his airline also has been watching the technology for years but “the urgency just isn’t there.”

But Ingalls at McCarran Airport predicts most airports will adopt the technology within five to 10 years.

“Hardly a month goes by that we don’t have airports come through looking at our system,’’ said Ingalls, noting that a group of airport officials from China will be visiting next month.

He explained that the tiny RFID transmitters, which have come down in price from 50 cents to about 20 cents apiece, are embedded in the white, bar-coded baggage tag wrapped on a bag's handle when it is checked at the airport. The transmitter “talks to” antennae located along the conveyor system, enabling the bag to be directed with almost 100 percent precision.

While laser scanners accurately read traditional bar codes about 85 to 90 percent of the time, Ingalls said the read rate with RFID-tagged luggage has consistently been 99 percent and could go higher. The system is currently being used on about half the 70,000 bags that depart McCarran each day, with plans for all of the bags to be tagged by early next year.

Because Las Vegas is a leisure travel destination, Ingalls said one of the drivers for the new system was customer service. “We are the first and last impression of Las Vegas, so the last thing we want is for passengers to have a frustrating experience.’’

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