July 30, 2008

The Airlines’ Bag Reflex

Michele Menno planned to spend the first week of April visiting relatives in Buffalo, N.Y., serving as bridesmaid in her favorite cousin's wedding, and introducing her new boyfriend to her family. But while the pair arrived at Buffalo Niagara International Airport, the suitcase and garment bag with all of the couple's clothes, their formal wear, and her bridesmaid's dress did not. Menno, a 41-year-old administrative assistant from Fort Lauderdale, Fla., started to get nervous. The next day, when a representative from Continental Airlines (CAL) called to say that their luggage, mistakenly flown to California, would not be returned until well after the ceremony, she was on the verge of tears. "It was utter despair," she said. "I thought: 'How can I be in this wedding?'"

Menno received her luggage after she had returned home, but she says the experience all but ruined her vacation. Frantic shopping and phone calls to replace their missing items kept her from the bridal luncheon, and cost her boyfriend time to meet the family. "You're frustrated, you want to cry, and you're pissed off," she said of the experience.

Of course, she is not alone. Every year millions of air passengers' luggage is delayed, sent to the wrong airport, or worse. But it's not just an inconvenience for travelers; it's a huge cost for the airlines. What, if anything, are the airlines doing about it?

Losing Customers, Too Bags that go missing on a passenger's arrival, officially dubbed "mishandled," cost the airline industry roughly $4 billion globally per year, according to SITA, a Swiss airline technology provider. Last year, customers in the U.S. filed over 7.5 million mishandled baggage reports -- roughly seven per 1,000 passengers. Some experts say these costs could be reduced dramatically, and complaints minimized, if airlines would take passenger convenience more seriously. Although eliminating mishandled bags altogether is a near-impossibility, some airlines and airports have successfully cut down on missing bags. At a time when airlines have resorted to cutting flights, stripping away passenger conveniences, and even slowing down planes to offset fuel costs, they may be overlooking an opportunity to save money that could also improve customer service.

You'd think that, given the fact that airlines are expected to pay more than $60 billion for jet fuel this year, they'd be eager to find ways to save money. The cost of returning a mishandled bag to its owner, including fuel, manpower, and ground transportation costs, is estimated at around $90 by the International Air Transport Association, and at more than $100 by some airlines.

But losing bags does more than cost money -- it can also cost repeat business. If an airline loses a passenger's bag, "you raise the possibility of losing the customer for the long term," said Robert Mann, an industry analyst in Port Washington, N.Y. The passenger dissatisfaction that accompanies a bad luggage experience can damage the chance that a customer will ever trust the airline again.

Not Just The Handlers However, some airlines and airports have made progress toward coordinating agencies with competing interests, unpacking complex systems and technologies, and navigating miles of conveyor belts and equipment. Their gains in baggage handling may hold lessons for the industry.

Bags have the hardest time making it to their destination when they are transferred from one aircraft to another -- usually, the baggage handler simply does not get the bag where it's going on time. But in a small number of cases, the fault lies with the printed luggage tag adhered to each bag, and used to track it. Industry experts believe they can eliminate such problems with new technology.

Fitting luggage with Radio Frequency Identification [RFID] tags, which have a near-perfect accuracy rate, instead of the more common paper optical-scan tags, has been hailed as one solution to mishandled baggage. Two airports that have embraced RFID technology are Hong Kong International Airport and McCarran International Airport in Las Vegas. Both report that the systems have dramatically improved their bag-handling.

A dime's differential Samuel Ingalls, McCarran's assistant director of aviation and information systems, explained that bar codes on optical-scan tags can be easily compromised by everything from a loose printer head to a dirty scanner lens. "From the time someone prints out an optical scan tag, the accuracy starts to degrade," said Ingalls. "RFID doesn't care whether it has a coat of dust on it or not." But universally implementing an RFID system would come at a cost. "Bag tags cost less than a penny to make," said Mayer, "but RFID tags cost upwards of 10 &cents each."

Yet the expense might buy long-term savings. Eric Wong, HKIA's general terminal manager, estimated that RFID tags would save the airport roughly $3.8 million by the end of the year, both by dramatically cutting the labor costs of towing mishandled luggage and by increasing the amount of baggage its terminals could handle. McCarran's Ingalls also believed cost analysis favored the tags. "It costs $95 or so to reunite a bag with a customer," he said. "In many cases, particularly with short-haul flights, that may be more than the customer paid for a ticket. The economics scale up pretty rapidly."

But updating technology isn't the only way to limit missing bags. Airlines like Airtran Airways (AAI) and Hawaiian Airlines (HA) -- which both have consistently low rates of mishandled bags -- also employ such low-tech solutions as daily check-in calls to airports, large-print luggage tags to help agents more easily spot errant bags, and pizza parties to motivate front-line workers. Some of the airlines with the lowest rates of mishandled bags attribute their success to the human touch and simple organizational focus. "Everybody has the technology available to them," said Jack Smith, vice-president of customer service for AirTran. But he says other airlines may not put a premium on eliminating baggage mishandling: "Quite frankly, it's a lack of discipline."

A Little Courtesy Blaine Miyasato, Hawaiian's vice-president of customer services, concedes that for larger airlines, baggage problems can seem difficult to conquer. "It can be formidable. It may well be that when you're dealing with hundreds of stations in hundreds of cities, there isn't that focus." Hawaiian Airlines operates about 175 flights a day to fewer than 20 destinations.

When a bag does go astray, some airlines and airports have tools to keep the situation from turning nightmarish. Airtran uses a computer system that allows customers to trace the progress of their mishandled bags online, and the airline measures how long passengers wait to receive their bags. McCarran Airport sends the unfortunate travelers a text message, or pages them, to say their bag will not be arriving on time, as well as when it is expected; they can at least forgo the long wait at the baggage carousel and what Ingalls called the "blank look" of an airport agent unable to track a bag. And Hawaiian takes the unusual step of FedExing some passengers' bags to speed their return.

But some bags are never found. Julie Roberts, a consultant from New Jersey, landed without her checked bags after a flight to San Francisco on JetBlue Airways (JBLU). About a week later, she was informed by the airline that it did not expect to find her luggage. Along with her bags and other things, Julie lost a cherished bracelet her husband had given her on their wedding day, and crucial -- and expensive -- allergy medication for which her insurance won't cover a new prescription. Of course, in addition to the expense of trying to locate her bags, the airline is liable for up to $3,000 for having lost them.

An Unexpected Solution The vast majority of mishandled bags is eventually returned to their owners, and only 0.08% are lost for good, according to SITA. But the belongings of those few unlucky travelers often wind up in the Unclaimed Baggage Center in Scottsboro, Ala., a clearing house that pays airports for baggage that cannot be returned to the owner. "We're a side note to what happens," said Brenda Cantrell, the store's spokeswoman, explaining that airlines typically search bags for five days for clues to the owner's identity, then stow them in a warehouse for several months until her store carts them away. She compares sifting through the store's treasures to shopping at a thrift store or a yard sale. Except, she adds, "these were things people wanted with them, not something they discarded."

Adding insult to injury, in some people's eyes at least, United Airlines (UAUA) announced in June that it would initiate a policy of charging passengers between $10 and $30 to check bags -- a move soon imitated by virtually every major U.S. carrier. Ironically, the fees may actually spare airlines and passengers from having to sing the lost luggage blues quite so frequently. If passengers check fewer bags, the odds of an airline losing some goes down. Moreover, the need for airlines to invest in expensive tracking technology becomes much less urgent. "They have so many competing priorities for a budget," said Catherine Mayer, vice-president of airport services for SITA. "I don't know where baggage sits."

Apparently, all too often, neither do the airlines.

Click here to see what happens to your bags when you check them in at the airport. It's amazing that more bags aren't lost.