Getting Your Bags is Half the Fun
Case Study
BUSI 430
The U.S. airline industry has experienced many changes in the past decade. Most carriers have reduced capacity in an effort to control costs, which means they are flying fewer and more crowded planes. And with many airlines tacking on extra fees to boost revenue, including charging for checked luggage, more passengers are trying to cram more of their belongings into overhead bins than ever before. In fact, some industry analysts believe nearly 60 million more bags are carried on board every year than the year before (How Delta is Trying to fix the Problem of Lost and Delayed Luggage).
Plenty of bags are still being checked. How many are reaching their destinations? The U.S. Department of Transportation reported that in 2016, more than 1.7 million bags were lost or misplaced on domestic flights. That sounds like a lot, but it is actually 1.4 million fewer bags than were lost in 2008 – just about the time most airlines adopted checked –baggage fees and inspired many passengers to start carrying their bags on board instead.
Other factors that might have helped reduce the number of lost bags are the more stringent airport security procedures being enforced by the federal government. Bags are more often scanned instead of being opened, streamlining the handling process and reducing errors. An increase in on-time arrivals has also helped, especially by reducing missed connections on multiple-leg flights. Bags checked through on connecting flights are usually the most likely be misplaced, airlines report.
Airline executives also credit advances in technology that have helped replace labor-intensive processes with more efficient paperless ones. Bar-code scanners, long standard in the shipping industry, now help airlines track bags at several points in their journey and even let baggage workers know when they are loading something on the wrong plane. Delta Air Lines is taking it a step further, investing $50 million in radio frequency identification (RFID) tags that will allow the airlines to automatically track individual bags via 5,200 RFIID readers located in 344 airports. The system will allow Delta to quickly pinpoint and resolve problems – ideally, before the customer even realizes anything is wrong.
RFID technology is just the latest investment made by Delta to improve its baggage-handling process. In 2006, Delta was near bottom of the industry in terms of baggage-handling performance. In response, Delta made a $100 million investment in baggage-handling systems at its largest hub Atlanta’s Hartsfield-Jackson International Airport. Conveyor belts and optical scanners, monitored from a central control room equipped with video screens, shortened the time it took bags to travel between five different terminals; what used to take 15 to 30 minutes was reduced to 10 minutes or less. A simple change to wider belt helped cut the conveyor jams in half, and four control-room employees were always on hand, prepared to tackle any trouble spots in the 14-mile system. The number of mishandled bags per 1,000 passengers fell from 9 in 2006 to 2.11 in July 2016. While Delta’s performance is now better than the industry average of 2.72 bags, it still trails Virgin Airlines, which had the best performance at just 1.03 mishandled bags per 1,000 passengers. It is important to note that it is not just the customer who takes a hit if a bag is lost- according to the International Air Transport Association, the average lost bag generates an additional $100 in handling costs for the airline (U.S. Department of Transportation Air Travel Consumer Reports).
Bozarth, C.C. & Handfield R.B. (2019). Introduction to Operations and Supply Chain Management (5th ed). New York, NY: Pearson
Read the above case and the following questions:
1. What costs of quality were highlighted in the case study? How can Delta Air Lines justify spending $100 million to re-engineer the baggage-handling process at just one airport? (this question relates to the cast study
The next group of questions do not relate to the case study. However, continue to expand on managing of quality.
2. Why can two people perceive the same product or service as having different quality levels? From a business perspective, why is it important , then to “know your customer”?
3. Several years ago a major automotive manufacturer was sued because the latch on a minivan’s rear door failed after the vehicle was hit from the side at 30 miles per hour. The plaintiff argued that the latch was of poor quality because it did not hold up under the stress. The manufacturer disagreed, noting that the latch had met all government requirements and had been made to specification. According to our definition of quality, can both sides be right? Explain and support.
