Wifi Revolution

Radio Frequency ID (RFID) technology—a method of storing and wirelessly retrieving data stored on small devices called tags—has applications in a number of shipping and distribution related industries. One of those is the airline industry.

 

A new report out today from ABI Research notes that “RFID has the potential to streamline and improve airline baggage handling, especially in this time of heightened security measures.”

 

Yet, while pilot programs exist or are planned to try out RFID in airline-related applications in a number of cities (including Hong Kong, Las Vegas, Narita and Qatar), the technology has not yet reached the critical mass necessary for wide adoption and the realization of its benefits.

 

One of the barriers to adoption of RFID in airline applications is the price of tags. International air travel may be up, ABI analyst Robert Foppiani said in a statement, but in the U.S. the market is flat and cash-strapped airlines (which perform the majority of domestic baggage handling) have few resources to invest in the new technology.

 

“Because the tags must be disposable, they must be cheap,” Foppiani noted.

Overseas, most baggage handling is performed by operators that provide the service to airlines, ABI said, which raises the question of whether airlines or airports will be more likely to purchase RFID technology.

 

At least for the time being, the answer could be “neither.” That’s because the legacy barcode infrastructure for baggage handling today still functions decently.

”While less flexible than RFID, it is well-entrenched and works most of the time,” ABI said in its report of the barcode technology.

Despite these obstacles, ABI projects that overall systems revenue for RFID in airline baggage handling will top off at $11.8 million this year—and will grow to nearly $27.5 million in 2011. That represents a compound annual growth rate of 18.49 percent.

 

“In general,” Foppiani said, “specific country markets within Europe and Asia will lead the charge; Asia’s less efficient barcode systems are ripe for replacement, and Europe has many transit hubs - cities catering to large numbers of inter-flight transfers.”

 

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