While not glamorous, the digitization of bag tagging could help airlines lose fewer pieces of luggage. Paragon, a public tech company, aims to scale up Security Label's business with customers like Air France.
Security Label, one of the largest makers of the barcoded bag tags airlines put on baggage, has been acquired by Paragon ID, a public company in France that provides contactless identification solutions, the companies said on Monday.
The businesses didn’t disclose the valuation of the deal. Paragon ID is acquiring 93 percent of the capital of the bag tech vendor. The balance of equity is held by Security Label CEO Montassar Ben Hmida. Paragon financed the acquisition with cash and credit.
Security Label is a company based near Hanover, Germany, that designs and makes baggage tags with RFID (radio frequency identification) baggage labeling tags. It works with more than 400 airlines and estimates that its market share in Europe, the Middle East, and Africa is about 70 percent.
Paragon ID is majority owned by Paragon Group, which has more than 9,000 employees worldwide and generates more than $1.5 billion (€1.3 billion) a year in revenue. It calls itself Europe’s largest manufacturer of RFID tags. Its subsidiary Paragon ID, which has about 500 employees, designs and makes contactless smart cards and readers and smart IDs for passports, identity cards, and electronic drivers’ licenses.
In 2019, Paragon ID became the exclusive provider of RFID baggage tags to Air France. The French national carrier decided last year it would switch all baggage tracking at Paris-Charles de Gaulle airport to tags equipped with RFID chips. The move will affect about 8 million pieces of baggage a year once the pandemic is over.
Better Baggage Tracking by Airlines?
RFID is a technology that’s been around for many years but, like QR codes, has seen a resurgence of interest in recent years. The RFID tags transmit little radio signals with a bag’s identifying number to sensors at airports to track the bags as they go through behind-the-scenes airport processes.
Bar-code printed tags have remained popular because they’re much cheaper and require less infrastructure to operate. But the price of adding RFID tags to paper barcoded tags has come down lately thanks to technology advances. The tags are also more accurate than the scanners used to read traditional bar codes alone. Scanning doesn’t guarantee that the luggage will be placed on the right aircraft, and paper tags are more likely to get damaged.
A greater digitization of baggage tracking could be a boon to travelers. In the years before the pandemic, more than 23 million bags checked each year worldwide were lost or delayed luggage. Over the past several years, dozens of airlines have added to their mobile apps the ability for passengers to track their luggage’s delivery. Airlines like Air France, Delta, and Qantas increasingly power this process with RFID tags.
More M&A to Come?
The acquisition raises the question about whether the air transport sector will see a pick-up in mergers and acquisitions activity as the pandemic wanes. Last week, Skift reported that Sabre had quietly sold Airpas Aviation, a software provider and consultancy company, to Ventiga Capital Partners, a private equity firm.
But it’s generally been a dry spell for consolidation in the space. One of the last headline deals was in 2019, when Amadeus, the Madrid-based tech giant, bought the airport automation equipment of ICM Airport Technics to bolster its services for airports.
Competitors to Security Label include Bartsch, Etikair, Hummel Print, JG Tech Innovation, Magnetic Ticket & Label, Smartrac, TracLogik, Tungate, and VidTroniX.
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Photo credit: A pre-pandemic demonstration of an Air France baggage tractor. Air France is a customer of Paragon for its baggage tags. Air France