|Home||Internet of Things||Aerospace||Apparel||Energy||Defense||Health Care||Logistics||Manufacturing||Retail|
Years Before RFID Baggage Tracking Takes Off
ABI Research yesterday announced that the market for RFID baggage tagging will be worth $11.8 million this year. It will grow at a CAGR of 18.49% through 2011, when the market value reaches $27.5 million. While RFID baggage tagging has received quite a bit of press, these figures indicate that in fact the market opportunity is small.
Oct 06, 2006—This article was originally published by RFID Update.
October 6, 2006—According to findings released yesterday by ABI Research of Oyster Bay, New York, the market for RFID baggage tagging will be worth $11.8 million this year. It will grow at a compounded annual growth rate of 18.49% through 2011, when the market value will reach $27.5 million. While RFID-enabled baggage track-and-trace has received quite a bit of press, these figures indicate that in fact the market opportunity is quite small. Even with the decent growth projected by ABI, the numbers are not significant enough to represent a material contribution to the overall RFID market in the near- to medium-term.
"It's still a pretty small market. There are two massive deployments, and the rest are just pilots," ABI analyst Robert Foppiani told RFID Update. The two main deployments are at the Las Vegas and Hong Kong airports. Among other locations, pilot activity is occurring in South Korea, where Asiana Airlines has equipped six regional airports, and in Europe, where Air France and KLM are conducting a joint trial between the Paris and Amsterdam airports.
According to Foppiani, there are a number of hurdles to wider adoption of RFID baggage tracking. The first is, as in so many open-loop applications of RFID, cost. Foppiani said that tag price needs to come down considerably for RFID to better compete with existing bar code tracking systems, which, while not as powerful or automated as RFID systems, are deeply entrenched in baggage handling processes.
Even when prices come down, it is unclear who will foot the bill for installing RFID systems because the responsibility for baggage handling varies around the world. In the US, the airlines are typically responsible; in Europe, it's the airport operators. "It's a matter of who is going to make those investments," said Foppiani. The issue is particularly pertinent to the US, where the airline industry as a whole is suffering. Adoption there is going to be stunted "until some of the American airlines start to see some revenue," said Foppiani. "At this time, most are operating at a loss."
The fact that one of the world's two major deployments -- Las Vegas -- is in the US seems to contradict this point. But Foppiani explained that Las Vegas's McCarran International Airport is an exception to most other US airports in that it plans on using the RFID system for applications beyond just track-and-trace. Because what draws most travelers to Las Vegas is tourism, the McCarran management is eager to provide a premium customer experience that will induce repeat visits. So eventually the airport wants to offer convenience services like baggage-checking at hotels, services that will leverage the RFID infrastructure.
The Hong Kong airport is also an exception due to its role as a continental hub. Much of the airport's business is pass-through traffic of passengers entering or leaving Asia, rather than those whose final destination is Hong Kong.
Thus, the fact that the two major baggage-tagging installations sport unusual business cases provides further evidence that baggage tagging is a very long way from going mainstream.
When it finally does catch on, Symbol Technologies will an early beneficiary. Foppiani cited the company as the leading hardware vendor in the vertical. As for technology, the deployments in Hong Kong, Las Vegas, and South Korea used Gen1 RFID. However, Hong Kong plans to transition to Gen2, while Air France is already using Gen2 at the Paris trial.
Read the announcement from ABI Research
Login and post your comment!
Not a member?
Signup for an account now to access all of the features of RFIDJournal.com!
SEND IT YOUR WAY
RFID JOURNAL EVENTS
ASK THE EXPERTS
Simply enter a question for our experts.