Delta Airlines lost bags, Management Homework Help

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All airlines and airports lose bags. After all, they must handle thousands of bags per day, sort through the bags on each plane like a 500-piece puzzle dumped on the table from a just-opened box, and then rush them to the right connecting planes or baggage carousels. The challenging logistics, however, don’t make up for the impact of delays on passengers. There’s the Rabbi flying to Israel, whose lost bag is returned waterlogged, with his belongings covered in black mold. Or the administrative assistant headed to Buffalo, New York, for her cousin’s wedding, whose lost luggage contained her bridesmaid dress and her boyfriend’s tuxedo. She said, “I was in utter despair. I thought: ‘How can I be in this wedding?’ You’re frustrated, you want to cry, and you’re pissed off.” Finally, there’s the Canadian singer who, on finding his $3,500 guitar damaged, sought and was refused payment by the airline. So he exacted his revenge by making a video and posting it on YouTube, where it has been seen 3.5 million times.

In all, 31 million bags are delivered late worldwide each year, or about 1.4 percent. In the United States, 7 people per 1,000 passengers, or roughly 1 per plane, don’t get their luggage on time, and they file 7.5 million mishandled baggage reports a year. Over the last decade, the three largest airlines, American, United, and—yes—Delta Airlines, are the worst offenders. Several key statistics stand out. First, Delta is 30 percent worse compared to the best airlines. Second, 28 percent more bags are delayed today compared to a decade ago. No wonder passengers are frustrated, especially when airlines charge a $25 handling fee for the first checked bag and $35 for the second. Nothing like paying extra to have the airline lose your bags, especially when Delta brings in $952 million a year in bag fees! Third, it costs $15 to transport each bag. Nine dollars is for labor, as ten people touch each bag, between check-in and the baggage carousel. U.S. Airways spends $250 million a year on labor for bags alone, or 11 percent of payroll. Four dollars is for sorting systems such as carousels, conveyors, carts, and tractors. Finally, fuel accounts for the remaining $2. And depending on oil prices, that’s sometimes lower, but in the last three to five years, it has generally been higher. Fourth, besides the customer dissatisfaction and ill will created, delayed luggage costs airlines $90 to $100 per bag, or $3 billion to $4 billion a year.

Passengers are beginning to realize that bag fees bring in much more than the cost to deliver bags, so they have every right to expect Delta to do a better job delivering bags. With advances in technology, clearly there have to be ways to use information technology to track bags and sharply decrease the number of delayed bags. If Amazon can send emails and texts notifying customers when their orders leave the warehouse, arrive at their local airports, and are delivered to their homes, then why can’t Delta do the same thing with luggage that’s supposed to never leave the airport, except in passengers’ hands? Surely there are ways to do this. What information technology changes would have to be made at the counter; behind the counter as bags are sorted and routed to planes; and then on the tarmac, where bags are sorted one last time as they are put on or taken off planes? Grocery stores and Home Depot have been using self-checkout lanes for several years. What kind of information technology would be required to use self-tagging, where passengers put destination tags on their own bags, and would that help the baggage problem or make it worse? Finally, Delta baggage handlers were caught stealing cameras, laptops, iPods, and jewelry from passengers’ bags. If we’re going to use technology to get more bags delivered on time, how can we also use technology to deter theft among our own employees?

If you were in charge at Delta Airlines, what would you do?

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