The airline industry has until June 2018 to comply with the new International Air Transport Association (IATA) Resolution 753. Whilst this resolution only applies to airlines which are members of the IATA, this still accounts for more than 80 per cent of all air traffic. For many of these airlines, compliance could mean an investment in new baggage handling systems which, in turn, will require the close co-operation of the airport operators and ground handlers. If implemented correctly, any investment driven by compliance could also provide an opportunity to drive down the cost of the baggage handling process and benefit the airlines, airports and ground handlers.
The aim of IATA Resolution 753 is to reduce the number of lost or mis-routed items of baggage by requiring member airlines to ‘maintain an accurate inventory of baggage by monitoring the acquisition and delivery of baggage’. The potential savings of reducing mis-routed baggage is demonstrated by the SITA 2015 Baggage Report. This states that the number of mis-handled bags was reduced from 46.9 million in 2007, to 24.1 million in 2014, providing savings of US$18 billion. However, the mis-handling of 24.1 billion bags in 2014, means that there is the potential for considerably more cost savings.
In order to comply with Resolution 753, the airlines must be able to demonstrate the delivery and acquisition of bags at three key checkpoints: aircraft loading, arrivals inject and transfers inject. The airlines must also provide an inventory of baggage on the departure of a flight and, crucially, be capable of exchanging data on these events with other airlines.
The first step in compliance will be for the airlines, airports and ground handlers to assess the capabilities of their existing infrastructure and systems. Then, there will be the more complex task of assessing which technologies will provide the most cost-efficient upgrade in each area.
It is at this point that the investment in compliant equipment can be seen either as a costly burden or a significant opportunity to drive down cost by increasing the efficiency of the baggage handling process.
As a minimum, the airlines will need to have the ability to scan each bag at each of the three checkpoints. The choice of scanning technologies ranges from basic manual scanning, to automatic tag reading (ATR) using laser scanning of the bag tag. Alternatively, an airline could decide to invest in RFID scanning. The challenge here is that, whilst RFID incurs a higher cost-per-tag for the airline, it would primarily be the airport that would be the main beneficiary of the faster and more accurate baggage handling process.
There is also the option of using hybrid paper bag tags which incorporate an RFID antenna and a barcode. This state-of-the-art scanning technology has already been installed in major international airports such as Hong Kong and McCarran, Las Vegas.
Each of these scanning solutions will demand a different level of CAPEX and offer a different return on that investment. So, the challenge will be to find the optimum balance between the investment and the return for each of the stakeholders involved.
The seamless sharing of data between the IT systems operated by the airline, the airport and the ground handlers presents another challenge but can also provide a further opportunity to reduce cost. The enhanced tracking of bags and the sharing of KPIs can lead to a more transparent process to support optimisation by allowing problem areas and bottlenecks to be identified and improved.
IATA Resolution 753 can provide a mutually beneficial situation for the airlines, as well as for the airports and ground handlers.
However, making an informed decisions on which upgrade options to choose will require in-depth understanding of the baggage handling process and the advantages and disadvantages of each technology.
There are no quick-fix solutions. Full co-operation between the airlines, ground handlers and airports, in addition to expert guidance, will be needed to transform a necessary investment in compliance into a cost-down initiative. This will not only benefit the airlines, airports and ground handlers, it will mean that significantly fewer passengers will experience the frustration of arriving at their destination without their bags.