Radio frequency identification (RFID) technology has been touted as a powerful tool in the fight against terrorism, from tracking cargo containers to streamlining border crossings, but questions about its cost and potential applications have clouded its prospects.

A project under way at Hong Kong International Airport, one of the busiest in the world, could supply many answers. Perhaps the world's largest single-site RFID implementation, the $50 million project is intended to boost security while improving the airport's baggage-handling efficiency.

The airport, also known as Chek Lap Kok, handles about 38 million passengers and 17 million bags each year. With the expected opening of Hong Kong's Disneyland theme park in September, the volume could reach 50 million passengers a year.

All of those bags must be checked, tagged, examined and tracked to ensure that they are loaded on the correct flight. Aside from being costly, systematic baggage identification and tracking errors can mean that bags risk falling through security cracks.

The bar code tags that the airport used before the RFID project was launched and as the RFID tag machines and readers are being installed perform adequately, but they can't keep up with the airport's baggage volume, said John Shoemaker, vice president of worldwide RFID development at Symbol Technologies, the U.S. company that is installing the airport's system. When bar code tags are stretched, torn or defaced, they become unreadable.

"When you can't pass 10 [percent] to 15 percent of the bags through the machines because of bar code misreads, that means thousands of bags have to be addressed manually," Shoemaker said. "That means people have to get involved in a complicated process, which translates into a lot of mishandled baggage."

RFID tags and readers, on the other hand, are accurate at least 95 percent of the time. When fewer bags have to be dealt with manually, better security and lower costs result. A system that can improve security is obviously beneficial, but it's a much easier sell if it can help pay for itself through cost savings.

With baggage, the cost justification is simple. Every missing or mishandled bag costs an average of $100 to replace or transport to its owner. About 1 percent to 2 percent of the total bags handled are lost or misplaced each year. At Hong Kong's airport, if 1 percent of the bags went missing, rectifying the problem would cost $17 million a year.

"Security was certainly a factor in the decision by Hong Kong to turn to RFID," Shoemaker said. "But the primary reason was operational efficiency and to be able to address growth. They wanted a good customer experience."

Passengers should see no difference with the RFID system because the silicon chip and antenna that make up the RFID tag are included in what looks like a bar code strip, which is attached to the bag using an adhesive inlay, Shoemaker said. The RFID printer encodes the tag with an International Air Transport Association "license plate" that includes the basic airline information along with passenger information and the flight number.