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Digitization is increasingly becoming the norm across industries and airports are no different. Several technologies are being tested and deployed at airports and the key driver for this trend is the enhanced passenger experience and operational efficiency. Airline operations are generally divided into ground and air with digital technologies such as barcodes, RFID, and biometrics and services and solutions such as mobile check-in, self-service kiosks for check-in and baggage drop, indoor geo-location, and electronic bag tags. However, digitization also comes with a host of challenges, ranging from technology expertise, industry mindset, to fierce competition. One of the key challenges facing airports today is mishandled baggage which is expected to result in significant monetary losses.

RFID, a Viable Solution

Urbanization is expected to result in significant increase in passenger volumes globally with airlines looking at various technologies to enable better handling of baggage. Since barcodes have proven to be an inefficient means to track baggage, RFID is being considered. From a technology perspective, RFID offers a better read range than barcodes and does not require line of sight (LoS) reading as well.

Radio Frequency Identification (RAIN), an industry alliance formed by the Association for Automatic Identification and Mobility, Smartrac, Impinj, Google, and Intel was launched to promote the growth of ultra-high frequency (UHF) technology. With the introduction of RAIN RFID and the uptake of RFID in retail, the cost of tags have significantly declined, making it more economically viable for airlines. Organizations such as RAIN RFID enable businesses and consumers to identify, locate, authenticate, and engage items in our everyday world. Additionally, the IATA Resolution 753, an initiative to reduce baggage fraud and delay was rolled out in 2018, which further drives demand for RFID in baggage handling. The benefits of RFID outweigh the concerns and are expected to improve margins for airlines.

Delta Airlines, one of the largest passenger aircraft carriers were the first to deploy RFID technology. Delta has witnessed 99.9% accuracy after deploying RFID and is expanding to other airports they operate in. Additionally, Delta offers real-time updates of the baggage to its passengers through its Fly Delta app. Through RFID, Delta enabled end-to-end tracking of baggage from the drop-off point at the source to the pick-up point at the destination. Technologies such as RFID enhance competitiveness in the cut-throat airline industry where there is minimal customer loyalty.

Despite being economical, resulting in quicker returns on investment (ROI), the RFID market in baggage handling is still not being adopted on a large scale by airlines due to their lack of clarity on the ROI timeline. That said, RFID is expected to witness considerable uptake in the coming years with North America and a major portion of Europe being strong markets. Furthermore, the mandate (IATA Resolution 753) from International Air Transport Association (IATA) is expected to drive the RFID market in the coming years. The increase in passenger traffic across Asia is also expected to drive the need for efficient ground level operations to enable panic free passenger travel. Hence, the Asia-Pacific and the Middle East have been identified as markets with high potential.

Rising passenger traffic will result in the challenge of managing baggage and tagging the data from the baggage. RFID implementations globally will drive data traffic to reach gargantuan proportions. Currently, airlines use private clouds which enable them to monitor baggage and offer customers a wholesome travel experience. A gradual shift from private clouds to public clouds is expected by 2020, which will enable small and medium-sized airlines to leverage cloud services to their advantage. The interest in RFID as a service (RaaS) is expected to witness a hike, specifically during peak seasons.

Artificial Intelligence (AI), the Next Frontier

The next frontier is to use cognitive computing on data from various sources and predict outcomes which are also better known as AI. Logistics companies are already using AI to predict any unwanted delay due to any event that may impact their delivery to customers. This could well be leveraged by airlines over the next decade.

Conclusion

The Internet of Things (IoT) is here to stay. Changing business landscapes are increasingly becoming common with new value chain partnerships and product innovations. Although RFID has high potential to facilitate baggage handling, it also faces major challenges in achieving large-scale adoption. Despite use cases and trends indicating a shift from traditional methods to RFID, airlines are still sceptical. That said, the market for RFID in baggage handling has huge potential. As is evident from the last decade, increasing awareness about technology and its benefits, coupled with market trends, continues to drive adoption levels of RFID in the industry. With the industry’s application suite requiring the services of RFID technology, the convergence of this technology with existing infrastructure and other technologies is expected to boost the adoption rate.

About Frost & Sullivan

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