1. What Would You Do? Case Assignment
Delta Airlines Headquarters
Atlanta, Georgia
All airlines and airports lose bags. After all, they must handlethousands of bags per day, sort through the bags on each plane likea 500-piece puzzle dumped on the table from a just-opened box, andthen rush them to the right connecting planes or baggage carousels.The challenging logistics, however, don’t make up for the impact ofdelays on passengers. There’s the Rabbi flying to Israel, whoselost bag is returned waterlogged, with his belongings covered inblack mold. Or the administrative assistant headed to Buffalo, NewYork, for her cousin’s wedding, whose lost luggage contained herbridesmaid dress and her boyfriend’s tuxedo. She said, “I was inutter despair. I thought: ‘How can I be in this wedding?’ You’refrustrated, you want to cry, and you’re pissed off.” Finally,there’s the Canadian singer who, on finding his $3,500 guitardamaged, sought and was refused payment by the airline. So heexacted 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 1,000passengers, or roughly 1 per plane, don’t get their luggage ontime, 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 keystatistics stand out. First, Delta is 30 percent worse compared tothe best airlines. Second, 28 percent more bags are delayed todaycompared to a decade ago. No wonder passengers are frustrated,especially when airlines charge a $25 handling fee for the firstchecked bag and $35 for the second. Nothing like paying extra tohave the airline lose your bags, especially when Delta brings in$952 million a year in bag fees! Third, it costs $15 to transporteach bag. Nine dollars is for labor, as ten people touch each bag,between check-in and the baggage carousel. U.S. Airways spends $250million 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 thelast three to five years, it has generally been higher. Fourth,besides the customer dissatisfaction and ill will created, delayedluggage costs airlines $90 to $100 per bag, or $3 billion to $4billion a year.
Passengers are beginning to realize that bag fees bring in muchmore than the cost to deliver bags, so they have every right toexpect Delta to do a better job delivering bags. With advances intechnology, clearly there have to be ways to use informationtechnology to track bags and sharply decrease the number of delayedbags. If Amazon can send emails and texts notifying customers whentheir orders leave the warehouse, arrive at their local airports,and are delivered to their homes, then why can’t Delta do the samething with luggage that’s supposed to never leave the airport,except in passengers’ hands? Surely there are ways to do this. Whatinformation technology changes would have to be made at thecounter; behind the counter as bags are sorted and routed toplanes; and then on the tarmac, where bags are sorted one last timeas they are put on or taken off planes? Grocery stores and HomeDepot have been using self-checkout lanes for several years. Whatkind of information technology would be required to useself-tagging, where passengers put destination tags on their ownbags, 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 goingto use technology to get more bags delivered on time, how can wealso use technology to deter theft among our own employees?
If you were in charge at Delta Airlines, what would you do?
