Managing information-principles of management

   
Delta Airlines
Atlanta, Georgia

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, dont make up for the impact of delays on passengers. Theres 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 cousins wedding, whose lost luggage contained her bridesmaid dress and her boyfriends tuxedo. She said, I was in utter despair. I thought: How can I be in this wedding? Youre frustrated, you want to cry, and youre pissed off. Finally, theres 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, dont 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, andyesDelta 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, thats 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 cant Delta do the same thing with luggage thats 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 were 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?

please use as many key terms as possible!

Key Terms
Moores law
Raw data
Information
First-mover advantage
Acquisition cost
Processing cost
data silo
data variety
Storage cost
Retrieval cost
Communication cost
Bar code
Radio frequency identification (RFID) tags
Electronic scanner
Optical character recognition
Processing information
Data mining
Data warehouse
Supervised data mining
Unsupervised data mining
Association or affinity patterns
Sequence patterns
Predictive patterns
Data clusters
Protecting information
Authentication
Authorization
Two-factor authentication
Firewall
Virus
Data encryption
Virtual private network (VPN)
Secure sockets layer (SSL) encryption
Executive information system (EIS)
Intranets
Corporate portal
Electronic data interchange (EDI)
Web services
Extranets
Knowledge
Decision support system (DSS)
Expert system
Artificial intelligence, or AI

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