Paragon ID is expanding its presence in the aviation sector for baggage management with its recent acquisition of German baggage tag company Security Label. The acquisition will allow the two RFID technology providers to combine their development and manufacturing efforts, and to reach a more global audience in the baggage-tracking environment for aircraft, says Konstantinos Lagios, Paragon-ID’s CCO. The July 1 cash transaction includes 93 percent of Security Label capital being acquired by Paragon ID. The balance is in the hands of Montassar Ben Hmida, Security Label’s CEO, which Paragon ID will acquire in the coming years.
Paragon ID is part of the Paragon Group, which has its own presence in the aviation industry. As an identification solutions provider, Paragon ID has approximately 600 employees and maintains five manufacturing plants, a research and development site, and a software-development facility. Its solutions include identification, contactless-payment, transportation-ticketing and smart-city applications utilizing Internet of Things (IoT), Near Field Communication (NFC) and RFID technologies. as well as traceability and brand authentication.
Konstantinos Lagios
Paragon ID has been in the baggage tag business for many years, competing against Security Label. Recently, Lagios says, it launched a strategy to move further into that market, leading to the acquisition. Security Label, based in Germany, is a provider of RFID tags and services for European airlines, and was founded in 1990. It sells thermal-printed, barcoded and RFID baggage tags for on-demand baggage tagging and manual tagging, along with interline tags for firearms or other specialty baggage.
Security Label’s tags are being used in industrial supply chains, as well as for ordinance and hazardous substance management, pharmaceutical monitoring, and ID cards and wristbands. The company currently has contracts with more than 400 airlines and airports throughout a hundred countries to design and manufacture baggage tags with built-in UHF RFID technology. The tags are read at key points throughout airports to automatically identify baggage being routed to and from airplanes.
The acquisition not only strengthens Paragon ID’s activities and aspirations in the aviation sector, Lagios says, but also “gives us a strong route to market for our wider existing RFID offerings to the domestic German market.” Security Label provides access to the local market, he says, and to German-speaking countries and clients. Paragon ID and Security Label were previously competitors, he notes, adding, “This allows our combined production facilities and client base to be better served.”
The acquisition comes as airline traffic is resuming following the pandemic-based travel hiatus. In 2019, prior to the COVID-19 quarantines, the International Air Transport Association (IATA) announced plans to support the global deployment of passive UHF RFID tags for baggage tracking in airline travel. The goal was to reduce the mishandling of baggage by capturing data regarding each bag as it is received and then routed to and from aircraft. The agency had reported that RFID can improve the end-to-end tracking of baggage, make the loading and off-loading of aircraft more efficient, and improve data consistency to reduce errors. In response to IATA’s Resolution 753, Paragon ID provided UHF RFID inlays and label manufacturing to develop an RFID baggage tag.
The Paragon ID tag was adopted in 2019 by Air France as part of a three-year contract, making it the first European airline to use such smart baggage products (see Air France Contract to Bring RFID to 40 Million Baggage Tags Annually). With the contract, Paragon ID was expected to provide around 40 million RFID tags to the airline every year. However, that number was reduced during the pandemic. The company has also deployed a solution for baggage trolley tracking with RFID technology, which has been trialed at London Heathrow Airport.
By combining its business with that of Security Label, Paragon ID says it poised to become a leading baggage tag supplier in the EMEA region, and it will work with airline clients, ground handlers, airport authorities and global systems integrators. “Our objective is to be the ‘go-to’ partner for all their passenger-handling material needs,” Lagios says. This, he explains, includes baggage tags, boarding passes and other printed materials used as part of their service offerings.
Going forward, the Security Label brand name will be cobranded with the Paragon ID name, since the company believes its newly acquired brand has presence and value in the market. The plan is to maintain that name, Lagios says, while branding future products in combination with Paragon ID. The co-branding, he predicts, will make the service offering stronger. Security Label’s existing factory, staff and operations will remain in place, he notes, adding, “As the industry returns to something approaching normal, we will be well placed to service any needs as they arise.”
Baggage-tracking efforts were delayed significantly by the pandemic, during which traveling was reduced. The interruption in airline projects worldwide put system development and investments on hold as well, so that businesses could conserve cash. There are now market signs, however, that that dormant period is coming to an end, Lagios reports—albeit unevenly, depending on the area of the world. Geographic markets are moving at different speeds, he explains, with Europe slightly lagging behind others. “This acquisition could help accelerate some of the growth in Europe,” he states.
With the acquisition, Security Label expects to leverage Paragon ID’s established position in North America to expand its business with airlines on this continent. Ultimately, Lagios says, “The acquisition of Security Label gives us access to the local German market and a footprint to promote our wider range of products and services, including RTLS [real-time location systems], mobile and account-based ticketing in the transit sector, and payment cards.”