P051112, ITP Conference BaggageAndRFID V1 0 Consulting •Frankfurt (Germany) •Dubai (United Arab...

The 3rd Annual Middle East Aviation IT Manager Forum

- Implementing RFID Tagged Baggage -

Dubai 22nd November 2005

m2p Consulting

www.m2p.net • Frankfurt (Germany) • Dubai (United Arab Emirates) • www.m2p.net

- 2 -3rd Annual Middle East Aviation IT Manager ForumImplementing RFID Tagged Baggage November 05

1

2 Baggage Processing with RFID

RFID Technology & Market Review

3 Cost & Benefit Analysis for an Airline

4 Recommendations


Three different chip-based RFID technologies are established in the market

Low Frequency Medium Frequency (HF) High Frequency (UHF)

868 MHz / 2.45 GHzFrequency 13.56 MHz100 – 135 kHz

Range Less 1 meter Less 1.7 meter Less 6 m / less 100 meter

Power Supply Passive Passive / Semi-Active Passive / Active

Bulk Read Limited 16/s up to 100/s Up to 500/s

Memory Up to 2 Kbit Up to 2 Kbit Up to 256 Kbit

Access Read Only or Read / Write Read / Write Read / Write

Shape Multiple Film Multiple

Tag costs 0.50 – 1.00 US$ 0.40 – 0.70 US$ 20.00 – 50.00 US$

- Overview chip-based RFID technologies -


Today RFID vendors are providing sets of different tags & scanners according to the customer specific requirements

- Sample HF Scanning Solution MOBY (Siemens) -

Specification:- 16 mm x 13 mm- 44 Byte- 120ºC

Specification:- 85 mm x 15 mm- 44 Byte-25ºC - +200ºC

Costs

ScanningRange

RFID Tag Type A – MOBY MDS D160

RFID Tag Type B – MOBY Smartlabel


Data handling by RFID chips follows several well-defined philosophies

- RFID Data Handling Philosophies -

Electronic Product Code (EPC) Data on Tag (DOT) Chip Sharing Approach (CSA)

The tag carries a unique identifier (product code) only. This approach is equivalent to a barcode

All EPC related data must be stored in a specific database which will be accessed during a scan to validate the tag

Strength: Very simple approach

Disadvantage: Central database is required with sufficient performance to support the scanning and processing

All relevant scanning object data is stored on the tag itself

For further processing DOT approach provides sufficient data without the requirement for a centralized database

Strength: No centralized database required; processing decision could be made decentralized during scanning

Disadvantage: More complex with regards to Tag creation

Enhancement of the DOT approach. Tag data is partitioned and could be used by two parties shared / separately with the possibility to define access rights

Strength: Beside initial object information (DOT) processing information could be saved on the tag

Disadvantage: Very complex with regards to Tag data manipulation and combination of centralized / decentralized information


Based the chip-based approach new non-chip based RF technologies emerging the market

Tiny antennas from Aluminum (~10 – 20 nm) distributed arbitrary on a carrier such as paper, plastics etc. producing a characteristic pattern (“fingerprint”) when moved into an electro-magnetic field (low power of 0.01 Watt is sufficient). Uniqueness of pattern: Probability is 1:3*1011 to be identical with a second pattern. Faking is nearly impossible

Application of synthetic pigments with characteristic resonating frequency to bearer; non-visible with naked eye, hard to fake. Authenticity can be checked with reading devices operation on the basis of laser, LED, IR or UV-sources

Chemical mixtures from 70 different, characteristic (non poisonous) substance will result in a 12 digit code to identify the bearer. Identification is done by means of absorption spectrometers

“Taggents”

Nano-Pigments

ChemicalSignatures

- Non chip-based RFID’s -


A review of RFID in other industries confirms the ongoing deployment of the technology

Retail: RFID tags are widely used in food branch (German Metro and Wal-Mart are pushing the technology). First step is to equip all boxes and cartoons with RFID tags

Personal Care: Gillette announced it will fix RFID tags to all razors. Unconfirmed reports say that the order of 500 mil tags reduced the price to 0.10 US$

Automotive: German automobile industry performed several pilot tests for the identification of parts with RFID’s. Targets: Automatic checks of completeness of cars, authentication of original spare parts, etc.

Food: European decreed 178/2002 enforces tracking of ingredients back to the producer from Jan 2005

...


RFID technology is becoming more and more common in the Aviation Industry

Maintenance & Engineering: The new Airbus A380 will have passive RFID chips on removable parts. Approximately 10,000 tags are within one single aircraft. With its new 787 Dreamliner Boeing plans to offer the same kind of service to its customers

Cargo: Lufthansa Cargo has implemented RFID based warehouse management in JFK & MUC together with Kuehne + Nagel to cover its transatlantic supply chain.

…


Compared to the established barcode technology, cost issue is still the main disadvantage of RFID

- Comparison Barcode vs. RFID -

Barcode

Established Industry Standard

Low operating costs

High availability across the process value chain

High Functionality

RFID

DisadvantagesAdvantages

Write once / not reprogrammable

Limited usability in difficult environment (light, humidity etc.)

Bulk / simultaneous scan not possible

Read / Write even without direct contact

Bulk / simultaneous scan possible

DOT philosophy provides platform for newly designed and improved processes

Possibility of improved process quality

Requires high investment in new technology

Still not an established Industry Standard

Operating costs (tags) are still high but expected to come down

Limited benefits without process redesign


1

2 Baggage Process with RFID



4 Recommendations


Beside the passenger journey managed by the airline, multiple providers are involved in baggage handling

Customerboarded

Customerseated

Customerboarded

Customerseated

CheckIn

Customerboarded

Customerseated

CheckIn

Check

Move

Scan

Match

Load

CKIBAG

The customer journey (controlled by the airline)

Local Provider

Unload

Move

Scan

Match

Load

Local Provider

Unload

Move

Scan

Match

Load

Local Provider

Lost &Found

CheckIn

The baggage flow (controlled by the local provider)

A B C

- Baggage Processes from an Airline perspective -


The quality of an airlines bag handling service is measured by the execution of the Transport Bag process

AHDMove

SearchMatch

Request Receive

Process “Recover mishandled Bag”

CompensateOHD

MoveSearch

MatchSend Delivery

ScreenMove

ScanMatch

LoadScreen

MoveScan

MatchLoad

Unload Unload

Process “Transport Bag”

EK

Deliver bag

EK

Accept bag

1st GHAAL 1st Leg 2nd GHA 3rd GHAAL 2nd Leg... ...

MoveDelivery

2nd GHA

Every fault within the transport baggage process places more load on the recovery process and drives up the costs for the Airline

- Baggage Core Processes -


Baggage processes are supported by multiple systems on the airline and airport side

WorldTracer

DCS*

Origin DestinationTransfer

BRS

Baggage Sorting*

DCS*

BRS

Baggage Sorting*

Baggage Tracking System / Repository*

Departure Control System (DCS)

BHS*

Recover Mishandled

Bag

TransportBag

- Baggage Systems Landscape -

Airline Systems System is optionalAirport / GHA Systems

Hub Control

BRS – Baggage Reconciliation System


The information exchange between systems, processes, and providers is defined by several IATA standards

Baggage Tag

IATA License Plate Concept / License Plate Number (RESO 740&769)

The LPN is a unique 10 digit number generated by accepting check-in system which enables the identification of a single bag. The LPN is visually printed on each baggage tag

Baggage Services

Messages

IATA Recommended Practice RP1745

Baggage Messages are well-defined text message to allow structure data exchange between all involved systems e.g. DCS, BRS etc. Message types are for example BSM (Source Message) etc.

- Relevant IATA Standards for Baggage related Information Exchange-

Automated Baggage Handling

IATA Recommended Practice RP1800

´The new RP1800 gives recommendations to airlines, airports and system providers of how Baggage Service Messages should be applied in the context of baggage processes

RFID Standard for

Baggage Tags

The RFID standard will use 850 – 950 MHz frequency; Air interface protocol is ISO-18000-6-c which is an open industry standard; Minimum data stored is LPN; Standard allows read / write multiple data items

Not released yet

Object IATA Standard Scope / Content

RFID implementation could either follow EPC or DOT concept


Besides the baggage processes themselves baggage irregularities are driven by multiple aspects

ProcessesBaggage

IrregularitiesProduct

Infrastructure

Aircraft

…SortingFacilities

LoadingEquipment

BaggageSorting

BaggageReconciliation

BaggageLoading / Unl.

TransferBaggage

InterlineTransfer

ConnectingTime

WideBody

NarrowBody

BaggageScreening

PriorityBaggage


The baggage handling processes could be improved by RFID on both sides between the Airport and Airline

Baggage Reconciliation

Baggage Loading / Unl.

The Baggage Sorting System within an airport could be build on RFID technology

Chances of ImprovementBecause of better reliability and higher scanning performance the overall throughput of a baggage sorting system could be increased

ChallengesHigh investment required to rebuild baggage sorting system

- Baggage Processes with RFID -

Baggage Screening

BaggageSorting

Baggage Loading / Unloading could be tracked with RFID much closer and could increase visibility to the airline.

Chances of Improvement: Availability of a baggage trail (real-time) which will allow to steer the baggage process and to measure GHA baggage performance

ChallengesRequires process changes and a central baggage repository to store all baggage trail data

Screening performance could be increased by using RFID in the same way as sorting. Depending on the used philosophy screening data could be stored on the tag itself (DOT)

Chances of ImprovementHigher throughput because of better scanning perfor-mance as well as improved security

ChallengesProcess has to be adapted to utilize new technology efficiently

Reconciliation performance could be increased and physical scanning process could be organized more flexible (airside vs. baggage build-up area)

Chances of ImprovementBetter performance and higher flexibility of the reconciliation process

ChallengesProcess has to be changed to achieve benefits


According to current developments several Airports are trying to improve their baggage performance with RFID

Airport LAS (2005)1st airport to use RFID on a large scale; Cost: $125 million over 5 years; Purpose: Baggage Sorting and Screening; Phase 1 completed with a performance of 60,000 bags a day

Airport HKG (2005)Purpose: Baggage Sorting and Tracking; Start of implementation in 2004

Airport JAX (2004)Trial jointly with Delta from 10/03 – 05/04; Purpose baggage sorting and screening; Uses 20,000 reusable tags

Airline BA (1999)Runs a test on the routes MAN-LHR and MUC-LHR; Overall 150,000 bags were tagged and scanned; Further rollout was stopped mainly because of cost issues

….

- Baggage related RFID Implementations at Airports / Airlines -

A few Airports (SFO, BOS etc.) have tested RFID technology but did not accept the technology because of reliability issues


1




4 Recommendations


Having to provide baggage RF tags for each passenger is the biggest cost issue associated with RFID

- RFID Implementation & Operating Costs -

HardwareNew Bag Tag printer for Check-in desks

RF Scanners for Baggage Reconciliation

RF Scanners for Lost & Found

SoftwareEnhancement for existing DCS and BRS systems

Centralized baggage tracking data repository (Optional)

ServicesImplementation (Roll-Out)

Hard- & Software Maintenance (Fixed)Maintenance of Software components according to defined SLA

Maintenance & Replacement of Hardware components (Scanner)

Consumables (Variable)Printer tags according to specification for all passengers

For example an Airline with 15 mil pax, 1.4 bags per pax and a price of 0.1 US$ per tag has to cater for 2.1 mil US$ for RF tags

Implementation Costs Operating Costs


Beside reduced recovery costs, there is a high savings potential in optimizing the transport baggage process

Potential Benefit DescriptionTangible Baseline

Mishandled Baggage Compensation

In case of delayed or lost baggage an airline has to pay direct compensation to the passenger. The amount depends on customer status / booking class.

Cost per lost Bag / Passenger

Yes

Processing cost of a delayed bag including internal and external staff (direct & indirect costs)

Process Costs “Recover Mishandled Bag”

Total cost per mishandled bag

Yes

Total cost per transported bag

Process Costs”Transport Bag”

With a restructured baggage handling process the overall costs per transported bag should be decreasing

Yes

Ground Handler Baggage Handling Performance could be measured by established KPI’s and could be linked to financial bonus / penalty.

Process Quality”Transport Bag”

Total cost per transported bag

Yes

- Tangible Benefit Analysis -

Additional benefits could be associated with RFID (e.g. Customer Satisfaction)


An analysis of European Carriers showed that the number of Irregularities is related to Airline size

LH

AF

AY

BA

BD

CYFI

IB

IG

JK

JP

KL

KM

LG

LO

LX

MA

OK

OS

RO

SK

SN

TK

TP

OU

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

20,0

22,0

0 20.000 40.000 60.000 80.000 100.000 120.000 140.000 160.000

* Source: AEA Annual Consumer Report 2004

- Correlation between Baggage Irregularities & Airline size -

No of Bags missing per 1000 Pax

ASKs (mill)

The top 4 carriers in Europe rank last with regards to Baggage Performance

Average 13.9 Baggage Irregularities per 1000 Pax


The profitability of RFID could be based on the assumption of reducing mishandled baggage cost

- RFID Implementation Sample ROI (Positive ROI) -

15 mil passenger with a 5% annual growth rate

1.4 pieces of bag per passenger (Industry Average MEA)

Baggage Performance:12 mishandled bags per 1000 pax

Costs: $1.5 mil total investment; 20% annual maintenance plus $0.1 per bag tag

Savings: Costs per mishandled bag $75; Improvement through RFID 15% of total cases

Assumptions

Reliable assumptions could be extracted from airline specific data

-3.000.000

-2.000.000

-1.000.000

0

1.000.000

2.000.000

3.000.000

4.000.000

5.000.000

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Totol Costs Total Savings Net Cash-Flow Cumulative Cash-Flow


In case an airline has already a good baggage performance this approach could lead to a negative ROI

- RFID Implementation Sample ROI (Negative ROI) -

15 mil passenger with a 5% annual growth rate

1.4 pieces of bag per passenger (Industry Average MEA)

Baggage Performance:6 mishandled bags per 1000 pax

Costs: $1.5 mil total investment; 20% annual maintenance plus $0.1 per bag tag

Savings: Costs per mishandled bag $75; Improvement through RFID 15% of total cases

Assumptions

According to the ROI calculation additional benefits have to be secured with the introduction of RFID to justify the required investment

-4.000.000

-3.000.000

-2.000.000

-1.000.000

0

1.000.000

2.000.000

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Totol Costs Total Savings Net Cash-Flow Cumulative Cash-Flow


1




4 Recommendations


The operating costs associated with RFID technology are still one of the major issues

Technology IssuesRFID tags will not work properly on container for liquids and within metal containers or behind metal grids

Operating CostsCurrently RFID tag costs are the biggest hurdle but even tag costs will come down further they will not become cheaper than paper tags

Measurable BenefitsSignificant benefits with RFID could only achieved through process changes and consistent availability across all process steps

!!!


It is recommended to assess the feasibility of a baggage related RFID implementation carefully

Assess opportunity / impact of process improvementsMajor tangible benefits could be achieved by process improvements in the area of “Transport Bag” and “Recover Mishandled Bag”

Outline technical solutionThe technical solution includes all Hard- and Software components required to implement enhanced processes with RFID

Evaluate Business BenefitsTangible business benefits have to be evaluated carefully and with regards to the process improvements

Prepare Business CaseCost and benefit estimates have to accumulated according to planned implementation timeline

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