Global airlines continue to lose an estimated $6.3 billion annually due to mishandled baggage despite major improvements in baggage handling powered by digital technology, according to the 2026 SITA Baggage IT Insights Report.
The report, released to mark the 20th edition of SITA's annual baggage benchmark, revealed that the global rate of mishandled baggage dropped by 23 per cent in 2025—the strongest improvement recorded outside the COVID-19 recovery period—even as global passenger traffic reached five billion.
According to SITA, about 24 million bags were mishandled during the year, with each incident costing airlines an average of $260.
The report noted that with the aviation industry's average net profit standing at $8 per passenger, a single mishandled bag could erase the profit generated from more than 30 passengers, while five such incidents could wipe out the profit from an entire flight.
SITA attributed the improvement in baggage handling to the growing adoption of digital technologies, including real-time data sharing, artificial intelligence-powered baggage routing, biometric bag-drop systems and connected passenger devices.
SITA's Portfolio Director for Baggage, Nicole Hogg, said baggage management has evolved from a purely operational function into a digital service driven by passengers' expectations for real-time tracking.
She said the industry's next phase would focus on expanding existing technologies across airports and baggage handlers to improve visibility throughout the baggage journey and strengthen passenger confidence.
The report highlighted several technology-driven successes across the aviation industry. It stated that integrating Apple's Find My feature with the SITA WorldTracer platform reduced permanently lost baggage by 90 per cent within its first year while cutting delayed baggage recovery time by 26 per cent. It also noted that Google's Find Hub location-sharing capability has now been integrated into the WorldTracer platform.
In addition, Thai Airways reduced baggage rebooking time from three minutes to just one second per bag across nine airports after deploying SITA's Auto Reflight solution.
SITA Chief Executive Officer, David Lavorel, said the industry's future growth would depend more on intelligent technology than on physical infrastructure expansion.
According to him, data, artificial intelligence and predictive operations are enabling airports to handle increasing passenger volumes more efficiently without expanding existing facilities.
The report further revealed that delayed baggage accounts for about 70 per cent of total mishandling costs, mainly due to recovery, rerouting and delivery expenses, while compensation remains the largest 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.
Looking ahead, the report projected increased investment in digital innovation, with three out of four airlines expected to deploy artificial intelligence solutions within the next two years, while half of global airlines plan to introduce real-time baggage tracking for passengers.
SITA also disclosed that compliance with the International Air Transport Association (IATA) Resolution 753 on baggage tracking has now exceeded 50 per cent, with full industry compliance expected by 2027.
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