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RFID Could Save Airlines $650M in Lost Bag Improvements

RFID tagging could reduce the error rate of mishandled luggage by more than two-thirds, yielding industry-wide savings of a staggering $650 million-plus.
Feb 23, 2005This article was originally published by RFID Update.

February 23, 2005—According to SITA, an airline industry information technology organization, RFID tagging could reduce the error rate of mishandled luggage by more than two-thirds, yielding industry-wide savings of a staggering $650 million-plus. An ideal application of RFID technology, tagging luggage would not only cut down on the exorbitant labor and time spent dealing with lost bags by having the ability to track their whereabouts in real time, it would improve customer loyalty by minimizing the number of irate customers that suffer the inconvenience.

But for the moment, RFID as lost-luggage panacea remains a few years off. Costs are still too high (tag prices would have to fall below 10 cents, according to one estimate), and the system would only make sense if every major passenger airport in the world participated. Note the chicken-and-egg parallels with supply chain adoption: RFID use will become widespread only when enough parties participate to drive costs down and create meaningful data sharing, but parties will only participate once costs come down and meaningful data sharing is already available.

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