Despite significant improvements in baggage handling driven by digital technology, the global aviation industry still loses an estimated $6.3 billion yearly to mishandled luggage.

This was contained in the 2026 SITA Baggage IT Insights Report, made public yesterday.

The report, which was released as the industry marked the 20th edition of its annual baggage benchmark, showed that mishandled baggage rates declined by 23 per cent in 2025, the strongest improvement recorded outside the COVID-19 recovery period, just as global passenger traffic climbed to five billion.

According to SITA, approximately 24 million bags were mishandled during the year, with each incident costing airlines an average of $260.

Given that the industry’s average net profit stood at just $8 per passenger, the report noted that a single mishandled bag could wipe out the profit generated from more than 30 passengers, while five such incidents could eliminate the profit from an entire flight.

The report expressed that although passenger volumes continued to outgrow airport infrastructure expansion, the adoption of advanced digital technologies was beginning to transform baggage operations.

It noted that real-time data sharing, artificial intelligence-powered baggage routing, biometric bag-drop systems and connected passenger devices were among the innovations responsible for the industry’s improved performance in 2025.

SITA’s Portfolio Director for Baggage, Nicole Hogg, said baggage management was increasingly becoming a digital service rather than merely an operational process.

Hogg pointed out that baggage was shifting from a logistical problem to a digital service as passengers expected to know where their bag was at every moment.

She said: “Baggage is shifting from a logistical problem to a digital service. Passengers expect to know where their bag is at every moment, and they’re increasingly willing to help us track it.

“The next phase is about bringing the technology we already have to every transfer, every handler and every airport offering greater visibility and connecting every step of the journey. That’s how the industry earns the trust passengers now expect.”

The report mentioned several technology-driven successes across the aviation sector.

According to the report, the integration of Apple’s Find My feature with SITA WorldTracer reduced permanently lost baggage by 90 per cent within its first year while shortening delayed baggage recovery time by 26 per cent.

SITA has also incorporated Google’s Find Hub item location-sharing capability into the WorldTracer platform, the report said.

Also, Thai Airways’ deployment of SITA’s Auto Reflight solution reduced baggage rebooking time from three minutes to just one second per bag across nine airports.

The Chief Executive Officer, SITA, David Lavorel, said the industry’s future growth would depend largely on intelligent technology rather than physical infrastructure expansion.

He added: “Data, AI and predictive operations let us get more out of the airport we already have, at check-in, security, the gate, on the apron and in baggage halls. Baggage shows the formula works.

“Solutions such as Total Airport Management take the same approach across the whole lifecycle, so airports can absorb growth without expanding their footprint.”

The report further revealed that delayed baggage accounts for about 70 per cent of total mishandling costs, largely due to recovery, rerouting and delivery expenses, while compensation constitutes the bulk of the cost associated with lost or damaged luggage.

Transfer baggage remained the leading cause of mishandling, accounting for 39 per cent of reported cases in 2025, an improvement from 41 per cent recorded the previous year.

Besides, the report projected increased investment in digital innovation, noting that three out of every four airlines planned to deploy artificial intelligence solutions within the next two years, while half intended to provide passengers with real-time baggage tracking.

It added that industry compliance with the International Air Transport Association’s Resolution 753 on baggage tracking had now surpassed the 50 per cent mark, with full compliance expected by 2027.