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
…show more content…
In August 1994, Mayor Webb approved the construction of a backup baggage system. At the same time, he notified BAE of a $12,000-a-day penalty for not finishing the baggage system by DIA’s original October 29, 1993 completion date. Webb also demanded that BAE pay for the $50 million conventional tug-and-cart baggage system. Gene Di Fonso, President of BAE, knew that his company could demonstrate that flaws in the overall design of the airport and an unsystematic approach to project changes had affected implementation of the integrated baggage system. He wondered whether he should just cancel the contract and cut his losses, or attempt to negotiate with the city for the support required to finish the system as specified, despite the severe deterioration in communication and rising hostility. Could the problems with the automated system be overcome with the dedication of additional resources? Given that the system represented a significant departure from conventional technology, would reducing its size and complexity facilitate resolution of the problems that plagued it? And, if the city could be persuaded to accept a simplified system, would the tenant airlines, particularly those with hubbing operations that had been promised more advanced functionality and better performance, be likely to sue?
Building the Most Efficient Airport in the World