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Baggage Management - Behind The Scenes

Back room work in baggage management is creating new opportunities in customer-facing services

Baggage has become a commodity. According to a US Transportation Department survey based on select US airlines, baggage fees increased 33% in the first three months of 2010.

The department’s Bureau of Transportation Statistics reports that in the third quarter of 2009 the ten largest US carriers collected $740 million in baggage fees—more than double the amount collected in the corresponding period a year earlier. Checked baggage is now one of the main streams in ancillary revenue, generating far more than early boarding or seat selection.

The trend for unbundling the product and charging for baggage has brought several issues to the fore. David McEwen, Manager, Passenger Interline Standards, IATA, says one of the most obvious difficulties is interlining baggage. It has become increasingly complex as baggage policies and charges change at airlines around the world. Rules can be dependent on routing, class of travel, and frequent flyer status.
“It is difficult to know which rules should apply and when,” he says. “There are too many proprietary systems out there, making it very hard to extract the correct information. There is a simplified standard, but it is coming under scrutiny in light of new market dynamics.”

McEwen notes this is the ideal time for Automated Baggage Rules (ABR), the latest Simplifying the Business (StB) project. ABR will generate benefits for the passenger and the industry. It will automate the processes behind individual baggage regulations to create an efficient and transparent system. Additionally, all the information will be housed in a single database, bringing clarity to the most complicated of itineraries.

ABR schedule

Following the approval in June for the project from the IATA Board of Governors, airlines were contacted to properly assess the current situation. “It means ABR is effectively vetted by the industry itself, a procedure common with every StB project and one of the reasons for StB’s success,” says McEwen.
At the end of September, airlines informed the Airline Tariff Publishing Company (ATPCO) what their baggage policy will be from 1 April 2011, when ABR will come into effect. ATPCO will now decide, in conjunction with stakeholders, the exact development program and how best to work with GDSs.

For airlines, the cost savings could amount to $850 million. And passengers get full transparency when making a booking. They will be able to see who is charging what for each leg of the journey. “ABR makes clear the charges and policy across the entire distribution chain,” says McEwen. “More importantly, it will take some of the pain away from airport encounters about baggage policies—again to the benefit of all parties.”

Martin McCool, responsible for product delivery at British Airways, says that baggage information on carrier websites and printed itinerary receipts is accurate for purely online travel but less clear for interline carriage when two or more carriers are involved. “In addition many carriers are adopting new baggage policies outside the traditional IATA model,” he says. “The airline industry has agreed a process to simplify interlining baggage and make it more transparent to the passenger. The hope is that ABR will lessen the volume of baggage issues and free up resources.”

Baggage improvement

Because airlines are charging for baggage they need to get the handling right. Although fewer passengers are checking in baggage—75.7% in 2009 compared with 83% in 2008 according to a SITA/Air Transport World Passenger Survey—in 2009 airlines reported that about 1% of total baggage was mishandled, equating to slightly more than 25 million bags globally.

This is almost 25% less than in 2008, down 40% from 2007, and represents year-on-year savings to the industry of $460 million. Nevertheless, there continues to be a focus on mishandling issues. The 25 million bags cost the industry some $2.5 billion and the cost of a mishandled bag continues to rise. In 2009, it was $100, up from $90 the previous year. IATA’s Baggage Improvement Program (BIP) is a key driver in solving the underlying issues.

BIP aims to identify reasons for mishandling and provide opportunities that could halve such incidents by 2012. Savings for the airlines could reach $1.9 billion. This is vital work if carriers are to improve such an important aspect of their customer facing work. According to the SITA Airline IT Trends Survey 2009, by 2012:

  • 63% of airlines will implement self-service bag-tag printing
  • 41% will use kiosks to report lost baggage
  • 36% will offer unassisted bag drop locations

Many of these options will be augmented by mobile technology, which will further enhance the transparency of baggage processes.

Performance benchmarks

IATA, in conjunction with the Airports Council International, has just launched a BIP self-help program for airports and airlines, which utilizes the BIP toolkit to reduce handling errors. “Aside from being free to participate in, the program will allow performance to be benchmarked against industry standards,” says Andrew Price, IATA Head of Baggage Services.

The BIP self-help guide will assist participants and the solutions proposed will be checked by IATA’s BIP team before implementation. About 20 airports will use the program in 2010 and some 120 are expected to complete it by 2012. Jakarta and Colombo are among the early adoptees.

“Lost and damaged bags are a huge industry cost,” concludes McCool. “Any means of improving the customer experience through better baggage handling is welcome. Online check-in and airport kiosks are speeding up baggage handling. This means moving away from manual to automated baggage systems.”

More information on www.iata.org/bip

EU Scrutinizes Baggage Compensation

 The European Commission is studying baggage compensation claims and appears to be of the view that the information provided to passengers regarding lost, damaged or delayed luggage is insufficient.

Baggage handling is, however, a complex process involving third parties such as ground handlers and customs officials. More than 50% of all mishandling involves connecting flights, where many processes are repeated with different partners, further adding to the challenge.

The Commission has indicated that it may revise Regulation 889/2002, which implements the Montreal Convention 1999 (MC99) for all air transport in the European Union. “It is thinking about creating national enforcement authorities and may apply sanctions in cases of non-compliance,” says Monique De Smet, IATA Director for Government and Industry Affairs in Europe. “But a specific enforcement body in each member state presupposes a problem with complaints and resolutions. There is no evidence of that yet.”

The Commission also speculates that the liability limits set out in MC99 and Regulation 889/2002 may not reflect the real economic value of consumers’ loss. But passengers have the right to choose a higher liability amount for any piece of baggage or equipment. For  example, passengers with reduced mobility have the right to declare a higher liability value for their mobility equipment, meaning that they would be compensated at this higher amount.

In any case, the maximum liabilities under MC99 and the Regulation were automatically increased by 13.1% -slightly higher than the Euro-area inflation rate of 12.54% - on 30 December 2009.

Why Do Bags Go Missing?

Transfers account for the greatest proportion of luggage mishandling.

  • Misconnected at flight transfer point (52%)
  • Failure to load (16%)
  • Ticketing error/bag switch/security/other (13%)
  • Loading/offloading error (7%)
  • Airport/customs/weather/space-weight restriction (6%)
  • Arrival station mishandling (3%)
  • Tagging error (3%)

 

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