Delta Air Lines said yesterday that it planned to use disposable radio tags to track all luggage it handles at domestic airports. The airline, which is based in Atlanta, said it would have to invest up to $25 million to deploy the necessary hardware and software throughout its operations, a process that it aimed to complete within two years.

The bet on the new technology, known as radio-frequency identification or RFID, comes at a time when Delta’s financial condition is so precarious that it has warned investors it might have to enter bankruptcy to reorganize its debts. But Delta executives who oversaw tests of the technology said they wanted to adopt it as fast as possible because they believed the investment would quickly pay for itself by reducing luggage handling costs.

Fewer than a million of the 80 million or so bags Delta handles in an average year fail to reach their final destination on the same flight as their owners, but locating and delivering misdirected luggage costs the airline about $100 million annually, according to Robert Maruster, Delta’s director of airport strategy. Not only will the technology cut down on the number of bags that fail to get on the right flight, Mr. Maruster said, but once Delta develops software to provide its agents with data from the tracking system, the agents should be able to tell passengers where their luggage went and when Delta will be able to deliver it.

More here.