Missing luggage will cost the airline industry $2.5 billion in the 2006 jet set. So about 1% of airline baggage will go astray, and for every one million bags handled 68 bags will be lost for good. With 3 billion airline bags expected to be checked in 2006 then 204,000 bags will be lost or stolen for good.
What bothers me is why the airline industry could not use Radio Frequency Identification (RFID) tags on airline baggage so that nothing will go a miss. Retailers are using RFID to great advantage, so why not the airline? The advantage of RFID is that it could store passenger information limiting loss by baggage mix-up. The other racket is that in some developing countries, some passengers can walk away with a foreigners suitcase instead of their own. While paper tags can easily be made, a RFID tag can prevent such a racket. You even have to watch out for luggage been stolen from a hotel lobby. Perhaps, RFID tags can monitor a piece of luggage beyond the airport and aircraft as well. For more information on the RFID debate, also see the RFID Journal.
PS: I am not an engineer by any means. So if a scientist or engineer can add a comment on the feasibility of using RFID's for airline luggage check-in, please do so.