The tags could speed up the process of checking in bags, one of the last remaining time consuming activities when checking in for a flight, a British Airways representative told the BBC.
"The old security questions such as, 'Did you pack your bag yourself?' are no longer a legal requirement, but the idea of queuing to check in your bag has never gone away," he said.
"The e-tag still involves going to a desk, but you literally just drop your bag off and someone has a scanner."
Data from the airline's online check-in process can be sent to the tag using the customer's smartphone.
"[The e-tag] is more expensive, but ultimately it is re-usable -- you would acquire and use it multiple times," Lewis Freeman, an industrial designer at Designworks who worked on the electronic tag, said.
"The life of the product is up to five years. I imagine the technology would move on faster than the tag would need replacing."
If tests are successful, the tags would launch in 2014, British Airways said.
"This is a fantastically simple, yet smart device that gives each customer the choice to have their own personalized electronic baggage tag that changes with the swipe of a smartphone -- every time they fly," Frank van der Post, British Airway' managing director of brands and customer experience, said.