Thoughts about mishandled Bags @ Airports and the related Costs
I was just asked by a student, that works on his final project in the area of airport BHS and potential cost savings, about the average financial losses related to mishandled bags at Hub airports.
I had no instant answer but promised to follow up after some research using data provided at publications from SITA and McKinsey.
The result was a surprise. Taking the data from 2019 (before Covid), the average passenger numbers of the 10 busiest airports are around 80 million per year. The mishandled baggage rate according to SITA was 5.6 bags per 1.000. Further, every passenger check in 1.2 bags what makes it 96m bags in total and 538t are mishandled. With the Montreal 99 convention, airlines committed to reunite such bags with their owner no matter where they final destination is. The efforts required to reunite such bags are significant. There is staff at every airport just working on that task. The cost per bag will be around 150 EUR. I have to mention that this information was given by someone working in the financial department of an EU capital airport. For sure every airport have different figures.
However, there will be no answer to the question without assumptions. That said, 538t mishandled bags and cost of 150 EUR per bag would make it 81mEUR per year additional cost to handle these bags. That’s a wow…..
领英推荐
My question here, and I know that many of my 1800 followers are somehow in the field of BHS, is if this figures make sense?
My main subject is predictive maintenance for logistical systems. Since 2015 my work focus on the ?design, implementation and support of condition monitoring systems capturing data that are used to apply modern ML methods. With data from 2015 onwards I can say that the statement from McKinsey that predictive maintenance can cut maintenance efforts by 18-25% in production lines is also confirmed to be valid if applied at Baggage handling systems. Okay, we are talking about mishandled bags here and for sure not all of these bags are related to unplanned downtime or poor maintenance. However, a high percentage will be related to downtime and service quality what will vary from between organizations. Means, some airports have a high O&M budget, good educated and motivated service technicians and sufficient number of heads. However, we know that this is not always the case and so maintenance results may not as good as it could be. Anyway, talking of 81m EUR per HUB additional costs and a very conservative estimate that just 10% of this bags are related to unplanned downtime would make it 8.1m EUR additional cost for mishandled bags related to unplanned downtime. For sure this figure vary between baggage handling systems and O&M provider. ?However, it seems we are talking about Millions here and not Thousands of EUR that are related to unplanned downtime, right?
Anyhow, that may explains the high demand on predictive maintenance solution as the RoI is in many cases less than 3 years.
But back to the estimations I made in the beginning of this article. Any feedback is much appreciated.
Baggage Handling System(BHS), Cargo Handling Systems(CHS) and Material Handling Systems(MHS) domain expert; Electromechanical Design, Development, Commissioning, Test and Integration.
2 年Hi Frank, Sure predictive maintenance is the way to go, but it would be able to cover not more that 60 to 70% of your maintenance requirements with the rest being preventive and corrective maintenance playing the spoiler. Further increse of predictive maintenance would require machine learning and other AI tools that have a longer period for ROI and difficult to justify for ever shrinking maintenance budgets Y-O-Y.
Chief Executive Officer at BNP Associates, Inc.
2 年Hi Frank, The vast majority of mishandled baggage at hub airports are from late arrivals of incoming aircraft with transfer baggage...likely 1/10 to 1/100th of the figures quoted by SITA are due to the BHS and unplanned shut downs. So while I agree that predictive maintenance is a powerful tool to prevent these failures, one has to be careful about justifying the cost or potential cost savings based on those general figures of mishandled bags.
Mentor, Coach, Consultant (Information Technology, Solution- and Service Design)
2 年Thanks for this post. I'm missing "Denver". It's BHS was a frequently told story then.
CEO at Siemens Logistics India Pvt. Ltd.
2 年Dear Frank, The data obviously comes with some deviations and needs normalization. As Dr Wegner mentioned the KPI's of airports we service are atleast 500 times better, yet as you mentioned there is a big need to bring in your expertise as Service 4.0 to airports and continuously improve the performance. Also as Dr Wegner pointed out the commitment and maturity of service provider should be a major consideration while selecting the O&M service provider.
Still dedicated to the Business of Industrial and Logistics Technical Services
2 年Frank, your article is a good impulse for thinking about the value of services. Here’s a couple of thoughts from my experience: In none of the airports we have been servicing over the last 20 years the LBI was so high. In fact, with 5.6 lost bags out of 1000 (even though that not all would be related to the BHS) we would have lost all of our contracts. That’s why I think that this average value is negatively impacted by airports with poor service maturity or occasional catastrophic incidents like happened recently in London. Nevertheless, this does not change the basic message of your post. Unfortunately, the value of good service does not always play an important role when service contracts are negotiated, and often price becomes the prevailing argument. One chapter in my book “The Management of Service Business” deals with Supplier Maturity and gives customers some hints for how to assess the maturity of their service providers. I’ll take your post as a trigger to write a Linkedin article about this topic.