We have seen it in the ERs…”we guarantee you will be seen in 30 min. or….”. But did we ever think we would see it in airports as we wait for our checked bags? After decades of mishandled and delayed suitcases arriving to the carousel (which costs the airlines $2.5 billion a year), the quality of service is finally improving dramatically—all because of OM efforts.
The Wall Street Journal (Dec.2,2010) reports that Alaska Airlines has just implemented a 20 min. guarantee. If a customer’s bag does not arrive at the claim area within 20 min. of arrival, fliers get a $20 voucher or 2,000 frequent-flier miles. Alaska has improved its misdirected baggage claims by 52% in the past 2 years. For all airlines the lost luggage figures are down by a whopping 38%. “If you are going to charge for bags, you better be really reliable”, says US Airways’ COO.
How did OM impact the change? New technology and revised processes (both in Ch.7) are the keys. Airlines have ramped up use of bar-code scanners to track bags along their journey–something cargo shippers and supermarkets have been doing for years. Delta invested $100 million in its Atlanta operations alone. It gutted the entire infrastructure under Terminal B to make room for an automated baggage system. Belt time is 7-10 min., vs. the old system of driving bags on carts, which took 15-30 min. Payback comes from less mishandled bags, which average $100 each.
Alaska Airlines has changed its processes and a new strict adherence to timeliness. Within 10 min. of arrival, all bags must be offloaded. And instead of measuring when the 1st bag hit the carousel, Alaska tracks when the last bag is delivered, posting scorecards for employees. “It is measuring and setting goals that are very specific”, says the airline.
Discussion questions:
1. Why and how did airlines improve so quickly?
2. What technology drives the changes?
3. What do students think of the 20 min. guarantee? Will other carriers be forced to match it?
I wish the standard had been “$20 after 20 minutes” in 1999, when U.S. Air lost my bag forever. By my calculations, they would now owe me $3,544,340. I was flying to Ithaca, New York, where I was giving a keynote address to my classmates on our 25th reunion weekend from Cornell. I had to go to a discount store at a strip mall to buy some clothes. I ended up giving the talk in badly fitting khaki pants, a short-sleeved shirt that even a computer nerd would not wear, and a pair of white tennis shoes. Just the impression I wanted to make at a reunion! However, my classmates thought it was funny, and most of them could identify with the situation.