Airport baggage theft and mishandling, which cost the global airline industry $750m annually in compensation claims, could soon be a thing of the past should the new radio frequency identification (RFID) technology prove to be effective.

Currently being piloted, RFID is a technology incorporated into a silicon chip which emits a radio signal that associates a user-defined serial number with a bag.

An RFID tag will replace the current barcode tags, which have been criticised for being prone to damage -- resulting in baggage being sent to the wrong aircraft.

According to global airlines lobby group the International Air Transport Association (Iata), the RFID tag can be used to determine the status or whereabouts of an item as it is processed.

"The RFID technology is quicker and more efficient than barcodes. It enables bags to be sorted and loaded faster and reduces the number of missorted bags, so reducing the number of delayed bags and their cost," says Iata.

The association says the benefits include enhanced baggage recovery and fewer delays from no-show passengers.

Iata director-general and CEO Giovanni Bisignani says the introduction of the new technology also forms part of the airline industry's attempts to improve efficiencies and save $6,5bn a year by simplifying processes.

Baggage mishandling is one of the major challenges facing airlines, airport operators and baggage handling companies worldwide.

National carrier South African Airways says it receives between 30 and 50 reports a day of passenger suitcases that have gone missing or have been tampered with. Baggage theft cost R40m a year.

Airports Company SA's (Acsa) CEO, Monhla Hlahla, said last year that a survey commissioned by the company found that 40% of staff would steal at some point. He said Acsa fired at least one staff member a day for baggage theft.

Iata says although any lost or mishandled baggage is regrettable, the incidence of such incidents is minimal. "Out of the 2-billion-plus pieces of luggage handled in a year, just over 1% are mishandled," says Bisignani.

He says, however, that reducing the small amount of mishandled baggage would result in "considerable savings" to the industry. Each incident of baggage mishandling costs $100.

Five airports -- Paris Charles De Gaul, Schipol in the Netherlands, Kuala Lumpur, Kansai and Narita in Japan -- are piloting the RFID technology.

In Africa, only the Nairobi airport, which is being used as a hub by Kenya Airways, has piloted the new technology. The tests, undertaken by the Transportation Security Administration of the US, showed a 98,2% read rate on tags on the Nairobi-Amsterdam route operated by Kenya Airways.

To ensure passenger privacy, Iata says the new tag will have only a 10-digit number and a date which will be of no use to anyone outside the of a baggage environment.

The current barcode tags show the passenger's name.

In a bid to make air transport more convenient for travellers, Iata is also pushing for the installation of common-use self-service kiosks at all major airports.

The kiosks, which will operate in the same way as automated teller machines, will offer convenient passenger check-in capabilities in remote facilities such as train stations, car parks and hotels. This will ensure faster check-in for travellers and reduce costs for airlines.

The conventional in-person check-in time takes 20 minutes on average, while the self-service kiosks have reduced this to less than five minutes in airports that have already rolled out the equipment, software provider SITA is quoted as saying by the US-based Air Transport World magazine.

According to the magazine, SITA added that traditional in-person check-in currently costs about $3,62 per transaction, while using a self-service kiosk reduced that to 52 US cents. Internet check-in and printing of boarding pass cut the transaction cost to 16c.

There is also a move towards internet booking or e-ticketing by the beginning of 2008.

Iata says an e-ticket costs $1 to process while the current paper ticket cost $10 each. E-ticketing will save the airline industry at least $3bn a year, it says.

The passenger self-service kiosks will save an additional $1bn a year with 40% market penetration.

But there is concern from labour analysts that the automation of check-in procedures could lead to job cuts.

Air Transport World quotes Iata as saying that one major European airline slashed its expenses by nearly $200m a year after investing $75m in automated check-in facilities and cutting back on call centre staff.

The challenge for airlines and airport operators is therefore to find a balance between putting passengers in charge of their travel arrangements and ensuring that their existing staff are not marginalised in the process.

Business Day