Heathrow Airport has installed a new automated baggage transfer system in a tunnel that links Terminals 3 and 5, to boost the reliability of baggage transfers.

BAA, the airport operator that owns Heathrow, last year revealed plans to invest £900 million in upgrading baggage technology and infrastructure at Heathrow, so that by 2014, each terminal’s baggage systems will be linked via a tunnel.

In BAA’s results for the year ended 31 December 2010, CEO Colin Matthews, said: “Significant progress has been made in renovating older terminals and we are investing nearly £250 million in a new baggage tunnel between Terminal 3 and Terminal 5 to speed up passengers’ journeys.”

The company reported a significantly reduced pre-tax loss last year, of £316.6 million compared to a loss of £821.9 million in 2009.

A spokesperson for the company previously said that the baggage tunnels would help to improve the speed and reliability of baggage transfers. It followed serious baggage system problems experienced by BAA in June 2009, which resulted in Heathrow not being able to move bags for passengers changing flights at the terminal. IT systems controlling the baggage belts were not ruled out as a cause of the problem.

Meanwhile, BAA reported in its results that Heathrow’s baggage misconnect rate had improved from 19 per 1,000 passengers in 2009 to 18 per 1,000 passengers last year.

Heathrow recorded 65.7 million passengers in 2010, which means that 1,182,600 suffered a baggage misconnect in the year. Though a large number, it was an improvement on the 1,252,100 out of 65.9 million passengers the previous year.

“The improvement on 2009 is notable given the challenges faced during two periods of prolonged, severe winter weather in January and December and from the record levels of passenger traffic through the third quarter of 2010,” the airport operator said.

As well as working on integrating baggage systems, BAA said that other main projects last year included construction work on the new Terminal 2 and the near completion of Terminal 5C (the terminal’s second satellite building). More than £800 million was invested in Heathrow in 2010, which is expected to increase “substantially” over 2011 and 2012, as work on the construction of Terminal 2 expands.