United Airlines, conceding defeat in its battle with Denver International Airport’s infamous $200 million automated baggage system, plans to quit using it in the fall.
“It’s never really lived up to its expectation, or at least been able to operate at its capacity,” United spokesman Jeff Green said.
The airline, joining all others at DIA, will rely exclusively on a decidedly low-tech manual tug-and-cart process. Besides improving baggage handling, the cash-strapped airline also hopes to save money: It has operated for more than two years under bankruptcy protection.
A dozen years ago, the problems with the automated system famously postponed DIA’s opening several times, costing the city hundreds of millions of dollars. It also made Denver the butt of jokes on late-night television.
The complex computerized system – had it worked – would have tracked and sorted bags for all of DIA’s airlines using bar-code technology and tubs riding on rails.
It was designed to serve all three concourses. But when the system didn’t perform as planned, then-Mayor Wellington Webb scrapped the idea in 1994, turning the system over to United alone on Concourse B and commissioning a traditional tug-and-cart system for concourses A and C.
United, which originally requested the system, still pays $60 million a year to Denver for automated baggage system space and equipment, which transports only baggage leaving Denver. Arriving bags are handled manually.
But the baggage mishandling rate with the automated system is “beyond our tolerance level,” United chief operating officer Pete McDonald said. “When the system breaks, we have to go into a manual sort. Planes are delayed and bags are often not on the aircraft with the customers, which is an inconvenience.”
“Going to manual, we don’t have exposure to those (problems),” he said. McDonald was United’s general manager at DIA when the system was developed and brought on line.
United remains on the hook for the $60 million annual payment – even though it won’t be using the automated system.
“We would review any options available to us to achieve any cost savings, but we are working closely with the city,” Green said.
DIA spokesman Steve Snyder said, “We still fully expect them to honor the terms of their lease.”
United signed a 30-year lease in 1995, he said. United “reassumed” the lease in 2003 in bankruptcy court.
Where it will save money – $12 million a year – is on maintenance and operations support.
United subcontracts for maintenance with Aurora-based Phelps Program Management.
United has been talking with airport officials for some time about stopping use of the automated system, DIA co-manager Vicki Braunagel said. But United has never told DIA the carrier won’t pay airport-lease costs for the system’s space and equipment, she said.
“They have a lease, and they have never once said to me they don’t intend to honor that lease,” Braunagel said.
United did ask whether DIA could assist it with certain structural modifications so oversized luggage could be carried by a traditional tug-and-cart system, Braunagel said. “We said we will work with you even if we have to fund some minor costs to make that happen.”
As for the $60 million in debt payments that United still must make for the unused bag system, Braunagel said the airport will continue to look at ways to reduce the debt burden of United and all other carriers.
“We very much want to manage the cost but not spread it to other carriers,” she said.
United pays DIA a little less than $200 million a year in total lease payments and fees, Braunagel said.
Regardless, the decision to abandon the system “is based on customer service” rather than lease costs, McDonald said. “It’s largely for our customer service that we’re going to have to go ahead and execute on this plan.”
The airline also would save just on lower costs for delivering fewer bags that are mishandled or damaged, Green said.
United’s year-to-date numbers show it mishandled 12.4 bags in Denver for every 1,000 passengers. That’s higher than at some other United hubs. In San Francisco, for example, the year-to-date baggage-mishandling rate is 6.1.
“The numbers in Denver we hope to get down to look more like that,” Green said.
McDonald said there is still a “hurdle to overcome” in testing with handling of odd-sized baggage, including skis and golf bags, but he believes United will be able to solve the problem and stop using the system around Labor Day.
The transition would not mean a change in staffing levels, Green said. Passengers should not notice a difference because of the change in systems.
What will happen to unused machinery is unclear.
“That’s something that would be up to the city,” Green said. “But they have older parts and other parts of it that haven’t been used or have been damaged that have been recycled for scrap metal.”
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
Staff writer Jeffrey Leib can be reached at 303-820-1645 or jleib@denverpost.com.
