The Denver International Airport Automated Baggage Handling System 

MIS 611 Group Project 

Winter 2005 

Justin Bainum, Hong Ji and Priyanka Kheny 

 

Executive Summary

      Baggage handling is at the heart of an airport.  The automated baggage handling system at the Denver International Airport (DIA) was a huge undertaking.  Not only would it be the largest system of its kind in the world but also the most expensive.  Originally designed for only one airline, United Airlines, it grew to encompass all terminals within the airport.  This enormous project had its inherent risks and uncertainties, and encountered many emerging problems.  As a result, the project caused massive delays of the airport opening and budget overruns.  It was regarded as a huge failure and a textbook example of how an IT project could go wrong.

      When the airport was finally opened, it had one automated system, a conventional system and a backup system for the automated one.  In this report, we examined the original rationales for an automated baggage handling system at DIA, its advantages over conventional systems, many problems encountered during the project and some solutions to salvage the project.  We also explored the causes for the failure, economic impacts and lessons that can be learned for future IT projects.

A) Introduction

   The Denver International airport was the first undertaking of such magnitude in the last 20 years in the US. At 53 square miles, this airport was designed to be the largest in the United States. During the construction period beginning in November 1989, 110 million cubic yards of earth was removed. Besides its massive size it involved state, federal, and local agencies and various airlines. Denver International Airport planners originally anticipated a $1.7 billion dollar price tag. The final cost more than tripled to $5.2 billion. When it was finally opened to the public 16 months late on February 1995, it had 5 runways, 88 gates and in many ways represented a model of the airport of the future. (Ayres Jr, 1995)

   Airports are judged by passengers on their ability to handle their baggage systems. Baggage handling is at the heart of an airport. The baggage handling systems at DIA connects gates in three concourses where baggage are loaded on and off the plane with two main terminals where passengers check and claim their luggage. United Airlines in the early planning stages insisted on an automated baggage system, like the one it operated in San Francisco. United Airlines did not want to operate on the conventional baggage system because it was time consuming and labor intensive. Denver officials decided that an automated baggage handling system, most closely resembling the one at Frank Joseph Strauss Airport in Munich, would be designed at the Denver International Airport. Denver, after some consideration concluded that all the concourses at the airport would operate on the automated high speed baggage handling system, not limiting it only to United Airlines.

   Boeing Airport Equipment (later becoming BAE Automatic Systems) was known worldwide for being a superior baggage system builder. Denver approached BAE systems and asked them to design an automated baggage system that would serve all the carriers in the various concourses. BAE came up with a proposal for the Denver International Airport; this system design was not only the most ambitious and biggest but also the most complex automated system ever designed. There were numerous benefits of the system

   BAE systems convinced the Chief Airport Engineer (Walter Slinger) that an automated system of this magnitude would work by building a prototype automated baggage-handling system. BAE systems built this prototype in a 50,000 sq. ft. warehouse near its manufacturing plant in Texas. (Donaldson, 1998)

B) Description of the IT

Functionality of the Automated Baggage System

      The fully automated baggage system originally planned for the Denver International Airport was exclusive in its design, its anticipated capacity and its novel technology. At check-in the baggage is glued with bar code labels that help to identify the bag’s details such as the name of the bag owner, flight number, airlines, intermediate connections and final destination. The check-in agent then puts the bag on a conveyer belt. A system exists for dealing with telecar allocation since no baggage can move without a telecar holding it. Tracking computers which are operated with the empty car management software (heart of the allocation system) dispatch empty telecars to where they are needed .The demand for telecars is sensed by the computers by measuring the flow of passengers throughout the airport. During peak times around 3550 telecars are available for moving baggage. (Schloh, 1996)

      The conveyor belt holding the bag advances, when an empty telecar arrives. At a T-intersection just as the telecar moves a type of high-speed luggage bowling machine flings the bag, catching the bag in its fiberglass tray. For this purpose each telecar has a tray that allows it to tilt into three positions for automatically loading, unloading, and carrying its baggage. In order to increase handling capacity and to save energy the telecars follow the “Dynamic loading” system where the telecars only slow down without completely stopping for loading or unloading. To associate the bag with its telecar, a laser scanner that is triggered by photoelectric sensors that detect a telecar’s presence is used. This laser scanner reads the bar code tag on the bag's handle and associates the bag with its telecar, before the telecar speeds away.

      The computer that scans the bar code tags looks up the table to match the flight number with the appropriate gate and then sends information to a BAE sortation computer. A tracking computer with the help of hockey puck-sized radio transponders mounted on the side of each telecar guides the telecar to its destination. Linear induction motors (LIMs) are mounted periodically on the tracks help the telecars to move on the tracks. Attached to the bottom of each telecar is a metal fin that slides through each induction motor and gains impulse as it moves. Computers control programmable logic controllers (PLCs) that help telecars merge with other telecar traffic and exit to unload stations. By communicating with PLCs that are responsible for causing track switches the computer directs a specific telecar. (Neufville, 1994)

Tracking Baggage

      The tracking computers monitor each of the system's thousands of radio transponders which emit millions of messages per second, as the telecars roll. If any change is made the computers must also track all gate assignments so that the telecars can be re-routed. The bags can be re-routed to special inspection stations by the tracking computers. In case of obstructions or failures, these computers must keep track so that telecars can automatically detour around a stalled vehicle or jammed track. (Schloh, 1996)

C.) Comparison of the two systems (conventional and fully automated)

The need for an automated baggage handling system:

      When the planners considered a conventional baggage handling system using the tugs and carts, it appeared to be unsatisfactory for a few reasons. Firstly moving baggage by the traditional system is a labor intensive and expensive process. The poor ventilation of the underground tunnel system for baggage movement would have meant that the diesel exhaust of the tugs would have choked the drivers and loaders of the tugs thus; a manual system which used tugs and carts was out of the question.

      Secondly the spanning of the long distances of the airport was an additional concern.  The traditional manual baggage handling system was deemed too slow, given the huge size of the Denver International Airport. A good example was the poor time performance of Denver’s Stapleton Airport with regard to turning around aircraft quickly. At the Denver International Airport, the distance between passengers, ticket counters, concourses, planes, gates, and the terminal are much larger than at other airports this makes distance and speed of delivery extremely important. Concourse A, which is the closest concourse, is 1,300 feet away from the passenger terminal. Speed became critical in moving baggage to keep flights on schedule. The traditional baggage system using the tug and cart would take as long as fifty minutes, resulting in missing most of the flights. Furthermore, across such great distances the underground tunnels were the only direct routes for moving baggage; these tunnels were incapable of accommodating gas-powered tugs. (Dodge, 1994)

      Thirdly the Airlines as well as the city were disappointed in the conventional manual system. The Airlines were losing a lot of their profits by not keeping their planes airborne, but grounded and waiting for baggage at the existing Stapleton Denver Airport. This Airport was frequently rated low among the nation’s airports for its on time performance and for its inability to handle the high volume of air traffic .By switching to a fully automated system the Airlines could not only increase their profits but also manage to keep their flights on time.

      Lastly unlike the conventional baggage system, which was labor intensive, the Automated Baggage system designed for the Denver International Airport required none of the manual labor personnel. The automation of this system is so thorough that it can locate any bag in the airport. Once the baggage is offloaded from the aircraft the only human contact it has is with its owner at the baggage claim. On Arrival passengers no longer have to wait for their baggage at the baggage claim because their baggage arrives there even before they do and on departure, their baggage arrives at the aircraft before they do.

D) Risks, uncertainties and emerging problems of the project

      As with any projects, building DIA automated baggage-handling system had its uncertainties and risks.  However, DIA had more than its shares of problems, due to the enormous size and complexity and poor planning.  There were anticipated risks as well as emerging problems as the project was carried out.  Because of these problems, the project caused 16-month delay for the airport opening and massive cost overrun.  It was regarded as a spectacular failure and a textbook example of how IT projects could go wrong.  Therefore, we will examine many problems encountered by the project.  It was recognized early on that there were several inherited risks for the project:

  1. The enormous size of the project.  Three other airports have this kind of system at much smaller scales, San Francisco International Airport United terminal, Rhein-Main International Airport in Frankfurt, and Franz Joseph Strauss Airport in Munich.  The DIA system would be 10 times larger and would use 12 times as many telecars as in San Francisco.  The Frankfurt system runs on trays and conveyor belts rather than high-speed telecars and is three times smaller in size.  Munich’s is far less complex.  The DIA system would require 300 486-class computers, a Raima Corp. database running on a Netframe Systems fault-tolerant NF250 server, a high-speed fiber-optic network, 14 million feet of wiring, 56 laser arrays, 400 frequency readers, 22 miles of track, 6 miles of conveyor belts, 3,100 standard telecars, 450 oversized telecars, 10,000 motors, and 92 PLCs to control motors and track switches.  Denver Major Webb once said: “This project is of the same magnitude as the Panama Canal or the English Channel Tunnel.” (Schloh, 1996)
  2. The enormous complexity of this large project.  Large projects are inherently more complex.  And complexity increases exponentially as the size increases.  The entire system consists of more than a hundred waiting lines that feed into each other.  For example, bags can only be unloaded from the aircraft and put into the system when the unloading conveyor belt is moving, this belt will only move when there are empty telecars waiting, empty telecars will only arrive after they have unloaded their previous loads and have proceeded through the system, and so on.  One step depends on another and one misstep could potentially cause many following steps to fail.  The season, the time of day, the type of aircraft, the number of passengers on these aircraft, the percentage traveling with skis, etc could all impact the pattern of loading and the reliability of the system.
  3. Novelty of the technology.  Individual components of the automated system had been used successfully at various airports, but integrating them into this size had never been attempted.  The speed for the system would be 10 times as great as the conventional systems.  Besides the three small systems in elsewhere, the technology had not been widely tested, tweaked, or adopted. 
  4. Large number of airport entities involved.  The system had to connect 88 gates in 3 concourses with check-in counters and baggage claiming areas for all the airlines in the terminals.  Everyone had its unique requirements.
  5. High degree of uncertainty in technology and project definition. Because of the larger scale and higher speed than the three existing systems, and lack of initial commitment from various airlines, technology and project would have to be modified as the project went along.  The airport itself was built as it was designed.  Numerous things had to be changed.  For the baggage system, initial structure for a conventional system for airlines other than the United had to be modified or torn down in order to accommodate the automated system.  Initial estimation of construction work (remove walls, install new floors etc.) to fit the expanded system was more than $100 million. As the system was built, airlines made many more requests for changes. (Bartholomew, 1994)
  6. Time constraint.  Initially only the United wanted to have the automated system, but 2 years into the airport construction, BAE was asked to expend the project to the whole airport and complete the project in 21 months.  BAE told the project managers that it needed one more year to build the system.  The less complicated system in Munich took 2 years of testing and was running 24 hours a day for 6 months before the airport opened. But no one wanted to listen.

   (Dubroff, 1994) 

  1. Management teams.  The City of Denver and a consultant team shared the leadership of the DIA project.  It quickly became clear that shared leadership was doing duplicate duties and not efficient.  The project was financed by many sources which all wanted to have a say, making it increasingly more difficult to coordinate and accommodate different administrative, political and social interests.  Open conflicts appeared and become rampant.  On top of that, the management had no experience of building automated baggage systems, but it assumed the responsibilities any way without making necessary changes in the management team.  As the new and uncertain technology and not-so-well-defined project brought out problems, the management team was unprepared and had difficulties to come up with solutions or alternatives.  One month after BAE was awarded the $175.6 Million contract to build a system for the whole airport, the head of DIA project resigned. (Dempsey et al, 1994)
  2. Overly optimistic about the design.  The system design at DIA was a leap in the technology, not a reasonable increment.  Components were expected to perform at their highest theoretical capabilities without allowing margins for errors or taking integrating difficulties into account.  The project management team accepted the design without carefully considerations for the space that it must fit into, the weight it may impose on the building structure, the power required to run it and the ventilation and air conditioning necessary to dissipate the heat it generates.
  3. Loss of a project champion.  Chief Airport Engineer, Walter Slinger was a champion for the automated system.  Unfortunately, he died just 6 month after the project started.  His replacement had a different management style and little knowledge of construction, and hands were tired up by the city council.
  4. Constant changes in design and construction.  Because of the late start, some of the structures already built to accommodate conventional systems had to be modifies for the automated system.  In the course of design, construction and testing, individual airlines made numerous changes to the system to meet their requirements not foreseen before the construction, such as adding ski-claiming devices and odd-size baggage elevators.
  5. Communication difficulties.  The channels to communicate among the city, the project management team, the consultant, DAE and airlines were never well defined.  Everyone had their own tracking systems for the activities.  There were several copies of everything.  They tried to merge them into one central database and it took 3 years to get it to work.  BAE felt being restricted to access anywhere they wanted which was granted in the initial negotiation with the airport.  Other construction work was blocking BAE progress.
  6. Labor disputes.  BAE’s original contract did not meet the requirement to award a certain percentage of jobs to minority owned companies’ set by the Denver’s city laws.  BAE had to hire outside contractors to meet this requirement at an additional cost of $6 million.  BAE also later lost the maintenance contract after a strike of millwrights and electricians because it only wanted to pay $12 per hour for jobs that the union demanded $20 per hour for. (Bartholomew, 1994)
  7. Software and mechanical glitches.  When tested, the system had many problems.  The software that controlled the movement of telecars sent empty cars back to the waiting pool instead of terminal building.  The “jam logic” software shut down the whole loop instead a section of track behind a jammed car.  Dirty optical sensors caused the system to believe that a section of track was empty when actually it was not.  Jammed cars jumped the track and bent the rails.  Cars dumped luggage onto the tracks or against the tunnel walls because of faulty switches.
  8. Legal troubles.  A federal grand jury conducted an investigation into DIA.  The SEC investigated the sale of $3.2 billion bonds to finance DIA.  The General Accounting Office of the Congress investigated the use of Congressional funds.  The City of Denver insisted on holding BAE responsible for failing to deliver the original system.  The city and various airlines hired law firms to prepare future litigations.  Denver major demanded a $12,000 per day penalty for missing the original opening day and the cost of building a conventional back-up system.

   Due to the problems encountered in building the baggage system, the opening of DIA was delayed several times.  A show of the system in April 1994 ended in a public disaster as the system chewing up luggage and scattering piles of disgorged clothes and other personal items beneath the tracks in front of the invited reporters.  Apparently, something had to change in order to salvage the project and eventually open the airport.  The City, BAE, United and other airlines renegotiated the terms of contracts and devised some solutions.

1. Management problems.  To reduce the duplicity in leadership, the City of Denver assumed the policy, financial and legal responsibilities and delegated technical part of the project to the consultants.  For the baggage systems, negotiations among the City, BAE and the airlines also brought changes in the organizational structure.  UA hired a construction manger with full authority to make decisions and a consulting firm for further assistance.  BAE hired its own consultant to develop test plans and prepare commissioning documents.  It started to work with people who understood the technology and its needs.  It signed a new contract with the United.  They formed a team of people with the same goal and developed a proper schedule. (Neufville, 1994)

2. Technical problems.  The City hired a German consulting firm “Logplan” to assess the automated baggage system.  Logplan isolated a loop of track and identified many problems.  However, the system did not run long enough to determine whether there was a fundamental design flaw or to find where actually the problems were.  Logplan nevertheless recommended construction a backup system to the automated one.  To reduce the probability of misreading the destination of each bag, more laser readers were installed.  More controllers were added to slow down the carts, reduce misalignments with the conveyors feeding bags, and minimize the momentum that tossed bags off the carts.  However, these solutions resulted in increased costs, reduced performance, and lower cost-effectiveness of the system.

3. Complexity problems.  To reduce the complexity to a manageable level, Logplan also recommended the configuration to be drastically simplified.  Only one concourse used by the United would be served by the automated system.  Each track would be operating at half the planned capacity.  The system was only to handle outbound baggage at the beginning, and inbound bags later and would not deal with the transfer bags.  As a result, the stability of the system was dramatically improved.

4. Legal problems.  BAE countered with a $40 million claim against the City.  It claimed that the whole DIA project was behind schedule and constant design changes made it impossible to install the original system.  It also alleged that the City limited BAE’s access to sites, delayed permits, did not build the space to house the system on time and broke contractual promise to make the baggage system the top priority by allowing other works to take precedence. (Dempsey et al, 1994)

5. At the end, BAE’s automated system was only installed for Concourse B, which United occupies.  A conventional baggage system designed around conveyor belts and propane-powered tugs and carts was built to service other airlines in Concourses A and C.  The automated system also has a complete independent backup system built with the conventional technology. 

E) Economic Impacts

      The original budget of the automated baggage handling system was $193 million.  In the end, close to $311 million was spent on the project.  The automated system failed in initial tests and, under pressure from the media and the public, the City of Denver was forced to build a manual system.  The cost of the manual system was approximately $80 million.  Additional costs of more than $100 million were needed to change the design of the terminals to meet the needs of the baggage system.  This must have seemed like a small over run when you compare that the total DIA project went over budget by approximately $3.2 billion dollars.  The additional monies that were spent were largely due to delays in the overall project.  Of course the baggage system was a catalyst for most of the delays.  (Dubroff, 1994)

      So where did the money come from to support this overrun of costs?  A major portion of the capital came from the issuance of bonds.  The citizens and businesses of Denver were promised that not a single penny would be taken from any Denver residents, through an increase in taxes, to pay for this project.  This left the city with only a few options.  They chose to issue bonds to raise the necessary capital for the project.  Initially this worked but as the delays mounted the city tried to issue more bonds to cover the rising costs.  This led to the original bonds reaching a near junk bond status.  The city was forced to offer higher interest bonds to attract new investors.  Towards the end of the project, it was costing the city approximately $1 million dollars each day the airport was not open.

      To recoup some of its losses DIA filed a formal dispute to have BAE, the company contracted for the automated system, pay for the costs of the manual system.  DIA complained that the problems from BAE’s system made the $80 million manual system necessary.  BAE, on the other hand, felt as though their work could not be completed due to a break in the contract that allowed unrestricted access to the terminals.  Other contractors were getting in the way of the BAE project team.

      DIA also is charging each airline a high passenger flight fee.  Typically the charge is around $5 to $8 per passenger.  DIA is charging $20 per passenger.  This cost is then passed on to the customer in the form of higher ticket prices.  The passenger fee for Denver is almost 3 times as high as other airports in large cities. (Ayres Jr, 1995)

F) Conclusions

      Obviously there are many issues that caused the demise and delays of this project.  DIA did not have the luxury of reviewing years of methodology.  Although similar projects existed, none were of the same size and complexity as the DIA’s automated baggage system.  They couldn’t research to see how others had planned and implemented such a system so that they wouldn’t make the same mistakes.  Some of the keys areas for the project delay are:

      Planning: The project management team needed to do a better job of planning prior to the start of the project.  Gathering as much data as possible for a project this size would lead to a better decision-making process.  The simple fact that the automated baggage system was designed after the airport construction had already begun was a major roadblock.  Planning for the automated baggage system needed to take place during the original design of the airport.  Management did not fully understand the complexity of the system.  Adding to this was the fact that the consultants that were hired to develop specifications of the system had no direct responsibility to the other teams that would do the actual development of the system.  BAE had to change its working structure to conform to DIA’s project management team. 

      Time: Time was another factor that caused major problems.  BAE was forced to attempt to complete their system in such a tight schedule that they did not even have time to review their designs to see if they actually worked.  BAE complained numerous times of the actual project scheduling.  However, the city of Denver took the stance that BAE had committed to this timeline in the contract and, therefore, should deliver it within the time allotted.  Most estimates show that a high percentage of large size system projects overrun their schedules.  BAE was not free of blame.  BAE should have been aware of these aggressive timelines before they agreed to construct the system.  At the time there were no other systems of this magnitude.  Based on its size, the project has been estimated to be about 100 times more complex then comparable systems elsewhere.  BAE was responsible for knowing that they would need ample time to test the system under many different circumstances.

      Communication: A lack of communication between DIA airport designers, city officials, the airlines and BAE further plagued this project.  To put together a formalized plan, the stakeholders for each group needed to meet to construct a proper plan.  This never happened.  The entire communication process seemed to be a top down approach.  High-level management, who had little or no understanding of the project, made the key decisions along with a few consultants.  DIA did not heed the advice of others.  BAE’s original overconfidence that it could complete the project by the specified date coupled with the city of Denver’s high expectations and demands let to the overall breakdown of communication between the parties.     

      Any airport trying to construct a similar system should start by reviewing these three main points before the project is to start.  Using the advice of scholars and industry leaders will also help gather the necessary information to build a formal methodology.  Anticipating that there will be problems and when they might occur will help in the planning phase.  Adequate time needs to be given to work out the so-called “kinks” in the system.  This may include months and even years of testing.  There can be a direct correlation between a project’s complexity and schedule.  The more complex the project, the more time needed to complete the project.  Realizing this and building a highly skilled project management team is the key to the success of a project. 

      Statistics show the history of IT project failures and the automated baggage system for DIA backs some of those stats.  For instance, IBM consulting group estimates that 55% of large distributed systems cost more than what is budgeted.  They also show that 68% of these systems are not completed on time.  The Standish group found that 31% of IT projects are canceled before completion.  Based on the information presented above we can see why software implementation projects are among the most difficult projects for a business today.  

 
 
 

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Neufville, R. (1994). “The baggage system at Denver: prospects and lessons,” Journal of

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Donaldson, A. (1998). A case narrative of the project problems with the Denver airport. 

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Ayres Jr, B. D. (1995). New York Times. "Finally, 16 Months Late, Denver Has a New Airport."

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Dubroff, H. (1994, March 1).Airlines can't bear cost much longer. Denver Post