Bae Hbr

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  • Topic: Denver International Airport, United Airlines, Southwest Airlines
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Harvard Business School

Rev. November 6, 1996

BAE Automated Systems (A): Denver International Airport Baggage-Handling System No airport anywhere in the world is as technologically advanced as the Denver International Airport.1 It’s dramatic. If your bag [got] on the track, your bag [was] in pieces.2 In November 1989 ground was broken to build the Denver International Airport (DIA). Located 25 miles from downtown Denver, Colorado, it was the first major airport to be built in the United States since the opening of the Dallas-Fort Worth Airport in 1974. In 1992, two years into construction, the project’s top managers recommended inclusion of an airport-wide integrated baggage-handling system that could dramatically improve the efficiency of luggage delivery. Originally contracted by United Airlines to cover its operations, the system was to be expanded to serve the entire airport. It was expected that the integrated system would improve ground time efficiency, reduce close-out time for hub operations, and decrease time-consuming manual baggage sorting and handling. There were, however, a number of risks inherent in the endeavor: the scale of the large project size; the enormous complexity of the expanded system; the newness of the technology; the large number of resident entities to be served by the same system; the high degree of technical and project definition uncertainty; and the short time span for completion. Due to its significant experience implementing baggage-handling technology on a smaller scale, BAE Automated Systems Inc., an engineering consulting and manufacturing company based in Carollton, Texas, was awarded the contract. Construction problems kept the new airport from opening on the originally scheduled opening date in October 1993. Subsequently, problems with the implementation of the baggage system forced delays in the opening of the airport another three times in seven months. In May 1994, under growing pressure from shareholders, the business community, Denver residents, Federal

1Fred Isaac, Federal Aviation Administration regional administrator, quoted in “Denver Still Working Out Kinks as Its First Birthday Arrives,” USA Today (February 28, 1996), p. 4b. 2Fred Renville, United Airlines employee quoted in “Denver Still Working Out Kinks as Its First Birthday Arrives,” USA Today (February 28, 1996), p. 4b.

Assistant Professor Ramiro Montealegre and Research Associate H. James Nelson of the University of Colorado at Boulder, Research Associate Carin Isabel Knoop, and Professor Lynda M. Applegate prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Some names have been disguised. Copyright © 1996 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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BAE Automated Systems (A): Denver International Airport Baggage-Handling System

Aviation Administration (FAA) commissioners, and the tenant airlines and concessionaires, Denver mayor Wellington Webb announced that he was hiring the German firm Logplan to help assess the state of the automated baggage system. In July, Logplan issued an 11-page report to the City of Denver that characterized BAE’s system as “highly advanced” and “theoretically" capable of living up to its promised “capacities, services and performances,” but acknowledged mechanical and electrical problems that “make it most improbable to achieve a stable and reliable operation.” Logplan suggested...
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