Airlines are doing better with bags

Here are some interesting numbers from the Wall Street Journal (Better Odds of Getting Your Bags, Dec 2).

So airlines are doing a much better job of getting checked bags where they are suppose to go. Of course, there a certain he’s-fast-for-a-catcher ring to that.

The problem of lost luggage, of course, is far from solved. Even with the improvement, more than 1.5 million bags didn’t show up on carousels as scheduled on domestic flights through September this year, according to the Department of Transportation.

A million and a half bags sounds like a lot but it is fully 900,000 less than were lost in the same period in 2008. The question then is what is behind this improvement.

The cynical answer is that you can’t lose what you are not trusted with. Baggage fees have reduced the number of checked bags (in the ballpark of 18% or so according to some reports) and that clearly has to have some some benefit. Schedule changes also matter:

A large part of the change, airlines admit, simply comes from passengers checking fewer bags to avoid fees and from airlines trimming their flight schedules to save money. Flights have run on-time more often—a key factor in baggage handling, since late-arriving bags, like late-arriving passengers, are likely to miss connections.

Baggage fees and reduced schedules may not be seen as benefits to travelers but real process improvement do have an upside for the traveling public. This graphic depicts what Delta has done to improve its baggage handling performance.

According to the article such investment are responsible for a large part of the gain in baggage performance.

But another major factor, accounting for perhaps half of the industry’s improvement, airline executives say, is the investment airlines have made in new equipment and technology, from hand-held scanners that beep when bags are being loaded onto the wrong flight to repair stations to get baggage tugs and carts fixed quicker.

The improvement is basic business, not rocket science. It’s in the airlines’ economic interest. Carriers have ramped up their use of bar-code scanners, for example, to track bags along their journey and alert handlers when bags are being loaded onto the wrong airplane. That’s something many other industries—from cargo shippers to grocery stores—have been doing for years. And in some cases, airlines have taken simple steps like reducing the drop points at big airports where airlines leave connecting bags for other carriers to pick up, cutting the time bags sit.

The catch-up by airlines has been significant. Most airlines have done away with paper handed to baggage handlers that used to tell them where bags go. Now scanners and wireless devices update immediately when gates or departure times change for flights. “They used to have to come to the break room to get a new piece of paper,” said Scott Dolan, senior vice president of airport operations at United Airlines. “A lot of it is simplifying the process.”

In thinking about these improvements, an immediate thought is why did it take so long? I appreciate that airlines are chronically under financial distress and investments like putting in new tunnels and conveyor systems don’t come cheap. Other systems like hand-held scanners, for example, don’t seem so expensive. Surely there were some cheaper opportunities out there. To put this in perspective, the article states that industry trade group estimates that a lost bag costs $100. Take the case of Southwest, which has both avoided bankruptcy and does not charge for bags.  According to their website, Southwest  flies over 3,200 flights per day. If they average 100 passengers per flight, they are mishandling slightly less than 1,100 bags per day and thus spending a few million per month on lost bags. That gets cut in half if they can get to the level of AirTran. Why has it taken so long for the industry to adopt process improvements?