Global mishandled baggage rates fell 23% in 2025, reaching 4.9 bags per 1,000 passengers. This improvement stems from digital transformation, including wider adoption of baggage tracking, automation, and artificial intelligence. Total mishandled volumes dropped 19% to 24 million bags, marking the best result outside the pandemic period. Despite the decline, mishandling still costs operators $6.3 billion annually, with each bag costing airlines $260 on average and $635 if lost. Transfers remain the biggest driver at 39% of cases. Africa continues as the highest mishandling region. Three in four airlines plan AI investment over the next two years, shifting baggage from a logistical problem to a digital service.