ODIN Forecasts Fast ROI for RFID-based Baggage Handling

By Claire Swedberg

In a new report, ODIN Technologies found that six EPC Gen 2 UHF tags had a 100 percent read rate in baggage-tracking tests, and that airlines and airports could recoup their RFID deployment costs within 18 months.

RFID solutions and services provider ODIN Technologies' newly published "RFID Baggage Tag Benchmark" report estimates that airlines and airports that deploy EPC Gen 2 RFID technology can recoup their deployment costs within 18 months. The study found that six of the tested tag models demonstrated a read rate of 100 percent in an airport setting with the baggage conveyor turned up to full speed—approximately 240 feet per minute—and that the tags can do so across the ultrahigh-frequency (UHF) spectrum, from 860 to 960 MHz.

Based on those results, says Patrick J. Sweeney II, ODIN Technologies' founder and CEO, a typical airport or airline could effectively track luggage on international flights through Europe, North America and Asia using a single tag. In addition, ODIN's researchers calculated the typical cost of building an RFID infrastructure for an airport or airline, used an approximation of the number of bags that are mishandled or lost due to missed reads of bar-coded luggage labels, and averaged the cost related to those mishandlings. Based on those figures, the team calculated the end users' return on investment (ROI).

Patrick J. Sweeney II, ODIN Technologies' founder and CEO

The study, sponsored by Siemens, began in summer 2009 and ended in November, and was divided into two phases, according to Chetan Karani, ODIN's lead RF engineer. For the first phase, the company studied 13 different EPC Gen 2 passive UHF tag models in its lab. In this case, researchers tested the read rate across the range of UHF frequencies used for RFID in Europe, Asia and North America, and also tested the best inlay designs.

The study then followed up at an unnamed airport with the six most effective tags, examining how well the tags could be read using interrogators from two manufacturers. Tags were placed on baggage composed of one of three types of material—soft fabric, hard plastic and metal. Although Sweeney declines to identify the specific tag models, or their manufacturers, he says the six most highly effective tags (used in the second phase of the research) all contained either the UCode G2XM or G2XL RFID chip made by NXP Semiconductors, the Monza 2 or Monza 3 chip from Impinj, or Alien Technology's Higgs-3 chip.

The study was a follow-up to scientific testing ODIN provided to the International Air Transport Association (IATA), an airline trade group, regarding RFID airline baggage tagging. When that research concluded earlier this year, Sweeney says, American airports and airlines requested that a further study be conducted on RFID tagging for luggage shipped internationally. Those airports and airlines are interested in taking advantage of U.S. stimulus money and funding from the Department of Homeland Security (DHS), for a better baggage-handling solution. When the results of the IATA study were released, he states, it "generated a lot of interest from U.S. based airports and airlines."

Based on the results of those tests, IATA chose three RFID inlay suppliers that it says met the operational requirements of the group's airline baggage-tagging tender (essentially, a request for proposal, or RFP): UPM Raflatac, Avery Dennison, and Alien Technology (see RFID News Roundup: Three Tag Makers, Including UPM Raflatac, Selected by IATA for Airline Baggage Tagging).

"This is an extension of that study," Sweeney says, in which ODIN is testing existing commercially available baggage-handling tags for effectiveness with different bandwidths.

Currently, most airline baggage is tracked using bar-coded labels, though about a dozen airports are utilizing RFID tags on their bags, reading them before they are loaded onto aircraft and again when they are unloaded. Industry-wide, Sweeney says, the average rate of mishandled baggage is approximately 10 percent, with about 10 percent of that mishandling being the result of failed bar-code scans. Mishandled bags are estimated to cost the industry between $90 and $100 apiece. On the other hand, he notes, this study demonstrates that if bags were tagged with RFID tags, they could be tracked at a rate of 100 percent.

One important concern for airlines and airports is whether a tag can be read globally. Therefore, the researchers tested the tags' range, ensuring they could be read at the UHF RFID band approved in Europe (865-869 MHz), the United States (902-928 MHz) and Japan (952-954 MHz).

"I was really surprised to see the RFID tags work so well on metal," Sweeney says. With bar-code labels reading at a rate of just under 90 percent, he indicates, he initially expected the metallic baggage to bring the RFID tags down to a similar rate—however, they were read 100 percent of the time. "I wasn't sure we'd improve on those [bar-code] read rates, so the fact that we got 100 percent was really noteworthy."

According to Sweeney, ODIN calculated a return on investment based on an average infrastructure investment of approximately $200,000, though that figure could change based on the size of the deployment. In carrying out its ROI analysis, he says, the firm reduced the expense of mishandled luggage from about $100 to $50, in order to gain a more conservative figure. ODIN concluded that the use of RFID would pay for itself within 18 months, based on the mishandling rate that would be reduced by employing RFID.

"I would anticipate a lot more airports will start looking for stimulus money," Sweeney says, which would help with funding and RFID deployment. The use of RFID to track baggage would not only reduce the operational costs of airlines and airports, but also help provide better service to passengers.

The "RFID Baggage Tag Benchmark" report is available online at a cost of $995.