Subject: [NEXTEL-1] Radio Tags Expected To Save Delta Millions

From: NEXTEL-1
Date: Thu, 01 Jul 2004 18:29:28 -0400

Radio Tags Expected To Save Delta Millions

Delta Airlines plans to invest up to $25 million for the necessary radio
frequency identification (RFID) hardware and software to use disposable
radio tags to track all luggage at domestic airports. Despite a weak
financial state, Delta executives believe using RFID will pay for itself
by reducing handling costs. The cost of locating and delivering
approximately 1 million bags that get separated from their owners on
Delta flights costs almost $100 million annually. Executives believe
that using RFID will help them cut these costs dramatically. Analysts
believe that RFID technology will push other airlines to do the same
thing. Early versions of the tags have been used to track and identify
assets such as, missiles and railroad containers.

==================================================================================

Delta to Invest in Radio Tags for Luggage at Airports
By BARNABY J. FEDER

Published: July 1, 2004

elta Air Lines said yesterday that it planned to use disposable radio
tags to track all luggage it handles at domestic airports. The airline,
which is based in Atlanta, said it would have to invest up to $25
million to deploy the necessary hardware and software throughout its
operations, a process that it aimed to complete within two years.

The bet on the new technology, known as radio-frequency identification
or RFID, comes at a time when Delta's financial condition is so
precarious that it has warned investors it might have to enter
bankruptcy to reorganize its debts. But Delta executives who oversaw
tests of the technology said they wanted to adopt it as fast as possible
because they believed the investment would quickly pay for itself by
reducing luggage handling costs.
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Fewer than a million of the 80 million or so bags Delta handles in an
average year fail to reach their final destination on the same flight as
their owners, but locating and delivering misdirected luggage costs the
airline about $100 million annually, according to Robert Maruster,
Delta's director of airport strategy. Not only will the technology cut
down on the number of bags that fail to get on the right flight, Mr.
Maruster said, but once Delta develops software to provide its agents
with data from the tracking system, the agents should be able to tell
passengers where their luggage went and when Delta will be able to
deliver it.
"It will be plainly obvious to the traveling public who has this and who
doesn't," Mr. Maruster said.

Analysts who follow RFID technology said that Delta's move could push
other airlines to make similar investments, just as Wal-Mart's highly
publicized decision last year to impose radio-tagging requirements on
shipments of products from its largest suppliers is driving adoption of
the technology in retailing. But analysts have said that Wal-Mart is
running into numerous hurdles as it pushes at the edges of the
technology's capabilities, and the same might well happen to Delta.

Last summer Wal-Mart said that it wanted its top 100 suppliers to ship
radio-tagged items by the end of this year and for the rest of its
suppliers to do so by the end of 2005.

Two weeks ago, Wal-Mart said the second wave of its rollout will be
confined to the next 200 largest suppliers. That would bring the total
involved by the beginning of 2006 to 300 companies, or just 1 percent of
Wal-Mart's supplier base. That group would account for roughly 70
percent of the goods Wal-Mart receives if every case and pallet they
sent was tagged, but Wal-Mart does not expect the entire range of
products received from the participating companies to be included so
soon, according to Gus Whitcomb, a company spokesman.

Early versions of radio tags are widely used to identify and track
valuable assets like missiles and railroad containers. The technology is
also used in automated toll collection systems like E-ZPass. Falling
prices for the tags and readers and the development of standards so that
equipment from different vendors can in theory work together has opened
the possibility of applying the tags to more types of goods.

Wal-Mart and other retailers see the technology as an improvement on bar
codes because radio tags can store more data than bar codes. In
addition, data can be collected from radio tags much more rapidly and in
more varied conditions than from a bar code, which must be scanned by a
laser beam.

That speed and improved accuracy is particularly appealing to airlines,
because employees reading printed destination codes and optical scanning
systems that check bar codes can become overwhelmed when airports are
busy. Officials at McCarran International Airport in Las Vegas announced
early this year that the airport would begin attaching radio tags this
fall to all luggage checked there. In tests, the RFID system that the
airport will use accurately routed 99.7 percent of luggage, compared
with a maximum of 89 percent for optically scanned bar codes, according
to Randall H. Walker, director of aviation for Clark County, Nev., which
owns McCarran.

Delta aims to use the technology in more demanding conditions than many
RFID applications face. For example, identifying luggage as it comes off
planes would expose the tags and readers to foul weather.

"Luggage may be more challenging than what Wal-Mart is trying to do in
the warehouse," said Thomas K. Ryan, an analyst who follows the
technology for the Aberdeen Group, a research firm.

McCarran and the Hong Kong International Airport, which recently
announced a plan to use radio tags, are using technology supplied by
Matrics, a start-up company based in Rockville, Md. Delta has worked
extensively with Matrics in its testing and has tested products from
other vendors as well, according to Mr. Maruster, but has not yet
settled on which systems it will use.

http://www.nytimes.com/2004/07/01/technology/01tags.html

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