Paragon buys baggage tag maker to digitize airline baggage tracking – Skift

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Security label, one of the largest manufacturers of barcode luggage tags placed on luggage, was acquired Paragon ID, a public company in France that provides contactless identification solutions, the companies said on Monday.

The companies did not disclose the valuation of the transaction. Paragon ID acquires 93% of the capital of the seller of technological bags. The balance of equity is held by the CEO of Security Label, Montassar Ben Hmida. Paragon financed the acquisition with cash and credit.

Security Label is a company based near Hanover, Germany that designs and manufactures luggage tags with RFID (Radio Frequency Identification) luggage tagging tags. It works with more than 400 airlines and estimates its market share in Europe, the Middle East and Africa to be around 70%.

Paragon ID is majority owned by Paragon Group, which has more than 9,000 employees worldwide and generates more than 1.5 billion dollars (1.3 billion euros) in turnover per year. It calls itself the largest manufacturer of RFID tags in Europe. Its subsidiary Paragon ID, which has around 500 employees, designs and manufactures smart cards and contactless readers and smart identity cards for passports, identity cards and electronic driving licenses.

Luggage tags for Air France. Source: Air France.

In 2019, Paragon ID became the exclusive supplier of RFID baggage tags for Air France. The French national company decided last year to switch all baggage tracking at Paris-Charles de Gaulle airport to tags equipped with RFID chips. This decision will affect around 8 million pieces of luggage per year once the pandemic is over.

Better baggage tracking by airlines?

RFID is a technology that has been around for many years but, like QR codes, has seen renewed interest in recent years. RFID tags transmit small radio signals with a bag’s ID number to sensors at airports to track the bags as they go through behind-the-scenes airport processes.

Barcode printed labels have remained popular because they are much cheaper and require less infrastructure to operate. But the price of adding RFID tags to paper barcode labels has come down recently thanks to advancements in technology. Tags are also more accurate than scanners used to read traditional barcodes alone. Scanning does not guarantee that baggage will be placed on the correct plane, and paper tags are more susceptible to damage.

Further digitization of baggage tracking could be a boon for travelers. In the years leading up to the pandemic, more than 23 million pieces of checked baggage worldwide each year were lost or delayed. In recent years, dozens of airlines have added the ability for passengers to track the delivery of their baggage to their mobile applications. Airlines like Air France, Delta and Qantas are increasingly fueling this process with RFID tags.

More mergers and acquisitions to come?

The acquisition raises the question of whether the airline industry will see a resumption of M&A activity as the pandemic abates. Last week, Skift announced that Saber had quietly sold Airpas Aviation, a software provider and consulting firm, to Ventiga Capital Partners, a private equity firm.

But it has generally been a dry period for consolidation in space. One of the last flagship contracts dates back to 2019, when Madrid-based tech giant Amadeus purchased airport automation equipment from ICM Airport Technics to bolster its services for airports.

Security Label competitors include Bartsch, Etikair, Hummel Print, JG Tech Innovation, Magnetic Ticket & Label, Smartrac, TracLogik, Tungate and VidTroniX.

For more background on how airlines aim to improve baggage delivery and the broader M&A trends, subscribers can turn to Airline Weekly for additional cover.

Photo credit: Pre-pandemic demonstration of an Air France baggage tractor. Air France is a Paragon customer for its baggage labels. Air France



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