A recent report revealed that airlines have successfully decreased mishandled baggage rates by 23% in 2025 through digital transformation efforts. Despite this improvement, the aviation industry still incurs a substantial annual cost of $6.3 billion due to mishandled baggage. The report by SITA, a key player in the air transport industry, emphasized a growing disparity between passenger numbers and baggage infrastructure.
The adoption of digital technologies such as real-time data sharing, AI routing, biometric bag drops, and connected passenger devices has played a crucial role in reducing mishandled baggage rates. However, the report noted that even with these advancements, 24 million bags were still mishandled in 2025, a year that witnessed 5 billion global passenger travels. Each mishandled bag carries an average cost of $260, significantly impacting the industry’s profitability.
The report highlighted the financial implications of mishandled baggage, revealing that one mishandled bag can nullify the profit from over 30 seats sold, while five mishandled bags can erase the profit of an entire flight. It also pointed out that delayed bags contribute to about 70% of total mishandling costs, primarily due to operational expenses for recovery, rerouting, and delivery.
According to the report, the main cost components for lost or damaged bags are compensation, accounting for up to 70% of the total cost. Transfer-related issues were identified as the primary driver of mishandling cases in 2025, representing 39% of incidents, a slight decrease from the previous year.
Nicole Hogg, Portfolio Director Baggage at SITA, emphasized the importance of enhancing technology to provide passengers with real-time updates on their baggage location. The report indicated that a significant number of airlines are planning to invest in AI technology in the coming years, with half of them intending to offer passengers live baggage tracking updates. The industry-wide implementation of baggage tracking under IATA Resolution 753 has surpassed the halfway mark, with full compliance expected by 2027.
