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Despite RFID Baggage Tagging Benefits, Cost Remain Hurdle
The New York Times published an article today highlighting the potential cost savings to airlines from reduced lost luggage through the RFID tagging of bags.
This article was originally published by RFID Update.
March 7, 2005—The New York Times published an article today highlighting the potential cost savings to airlines from reduced lost luggage through the RFID tagging of bags: as much as $650 million annually. The Times article focuses on the potential hurdles to an industry-wide RFID baggage tracking initiative, most notably cost. Despite the fact that the predicted savings would be huge and ROI presumably quick, the airlines are wary of making the investment given their precarious financial condition. Since 9/11, most news with respect to the airline industry has revolved around its flirtation with all-out insolvency. Texas Instruments' Bill Allen is quoted as saying, "Airlines are concentrating on keeping their doors open for business. Until it's required, I don't think airlines are going to have an incentive to roll it out throughout their entire system."
Even Delta, who was the frontrunner in RFID baggage tagging and last June announced a $15 - $25 million commitment to tag every bag, has backed off. Delta's spokeswoman said, "We felt we could use our resources in other areas."
But there are other hold-ups. The modifications to the supporting backend systems would be messy and expensive. Also, North American airlines and their European counterparts disagree on the level of sophistication the RFID tags should have. Finally, as RFID tags are found more on airline parts (remember that Airbus's "biggest passenger aircraft in the world" unveiled in January weighs in with 10,000 RFID tags), tag interference would present a technological challenge. And that's not even considering what happens when retail item-level tagging takes hold. Not only will the bags themselves probably include a tag or two inserted by its manufacturer or retailer, the clothing and other consumer goods within each bag will also have tags. Imagine: dozens of tags per piece of luggage. And we thought the idea was to simplify baggage handling.
Read the article at NYTimes.com
March 7, 2005—The New York Times published an article today highlighting the potential cost savings to airlines from reduced lost luggage through the RFID tagging of bags: as much as $650 million annually. The Times article focuses on the potential hurdles to an industry-wide RFID baggage tracking initiative, most notably cost. Despite the fact that the predicted savings would be huge and ROI presumably quick, the airlines are wary of making the investment given their precarious financial condition. Since 9/11, most news with respect to the airline industry has revolved around its flirtation with all-out insolvency. Texas Instruments' Bill Allen is quoted as saying, "Airlines are concentrating on keeping their doors open for business. Until it's required, I don't think airlines are going to have an incentive to roll it out throughout their entire system."
Even Delta, who was the frontrunner in RFID baggage tagging and last June announced a $15 - $25 million commitment to tag every bag, has backed off. Delta's spokeswoman said, "We felt we could use our resources in other areas."
But there are other hold-ups. The modifications to the supporting backend systems would be messy and expensive. Also, North American airlines and their European counterparts disagree on the level of sophistication the RFID tags should have. Finally, as RFID tags are found more on airline parts (remember that Airbus's "biggest passenger aircraft in the world" unveiled in January weighs in with 10,000 RFID tags), tag interference would present a technological challenge. And that's not even considering what happens when retail item-level tagging takes hold. Not only will the bags themselves probably include a tag or two inserted by its manufacturer or retailer, the clothing and other consumer goods within each bag will also have tags. Imagine: dozens of tags per piece of luggage. And we thought the idea was to simplify baggage handling.
Read the article at NYTimes.com
