New Study Illustrates Business Benefits for RFID Baggage Handling Systems In Airline Industry

Though many successful RFID technology pilot programs have been conducted for the aviation industry, the focus of most programs has been on the ability of the technology to perform at an acceptable level and to measure reliability of equipment. BearingPoint’s new methodology goes a step further, providing analysis of the business and financial impacts of implementing an RFID-enabled baggage handling solution.

Key findings of the study included:

• Price point at which RFID technology begins to provide real return on investment to an airline or airport.
• Return on investment will vary greatly depending on an airline's or airport's performance in areas such as the number of mishandled bags per 1,000 passengers, airline and airport costs for handling and delivering mishandled bags, barcode read rates, and industry RFID tag pricing.
• Those who operate a hub and spoke system, or have a higher number and cost of mishandled baggage, or a relatively low automated barcode read rate would be the best candidates to benefit from an RFID system.
• Midsize airports and airlines with a focus on point-to-point traffic and limited transfer activities are less likely to be able to justify an investment into RFID by quantitative savings alone in the near term.

The study, which also included operations at the airports in Stuttgart, Germany and Palma de Mallorca, Spain, generated significant understanding of cost implications to the airline, potential RFID solution scenarios, benefit generating mechanisms, and insight to future return on investment. Hapagfly and Hannover Airport teamed with BearingPoint for the study in order to explore new ways of serving their customers better and to understand business implications of implementing RFID baggage tags.

“Hapagfly is always looking for ways to improve its value to its customers, and we wanted to understand if and how our already high performance in baggage handling could be improved through RFID,” said Roland Taylor, Director of Operations for Hapagfly. “The BearingPoint study provided valuable insight and perspective of such an investment.”

Gert Hennighausen, Director of Operations at Hannover Airport said they participated because of a “planned refurbishment of the baggage handling systems in Terminals A and B, and we wanted to understand whether and how RFID technology could be integrated into our plans.”

Based on a set of standardized questions and observations, BearingPoint’s methodology allows the firm to quickly assess the business feasibility of implementing RFID baggage handling in any given environment: a single airline, airport or a system of airlines and airports. The tool takes into account historical, current, and forecasted performance measurements, and factors-in current and planned technology costs (including those for baggage tags) to help BearingPoint clients develop a solid RFID implementation strategy.

“We are convinced that RFID will become a standard for baggage handling in the industry,” said Dr. Christian Petschke, managing director for BearingPoint’s European aviation practice. “Although RFID may not be suitable for every airline and airport in the near term, we believe BearingPoint’s methodology and experience will provide clients a better ability to evaluate the technology and forecast potential return on investment.”