How the airlines handle the ‘mishandled’ luggage problem

Jaime Sigal’s suitcase felt a little light when he picked it up from the conveyor belt in Sao Paolo, Brazil, so he gave the heavy-duty ballistic nylon bag a careful once-over.

Sure enough, the zipper appeared to have been forced open. Sigal, who works for an export management company in Miami, made a beeline for the LAN Airlines counter. Three items were missing from his luggage: a blazer, a leather jacket and boots. He’d paid a total of $1,700 for the items last year.

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Every day, the same scenario repeats itself in airports everywhere. Luggage is lost or pilfered, and airlines do their best — or not — to find or replace it.

Last year, there were more than 2 million reports of mishandled luggage among domestic airlines, according to the Transportation Department. That’s down slightly from the year before, when roughly 2.1 million bags went astray. (While the government doesn’t distinguish among lost, damaged, delayed and pilfered baggage — referring to it all as simply “mishandled” — airline passengers certainly do.)

The biggest offender? Among the major non-regional carriers, American Airlines had the worst record, with 3.82 reports per 1,000 passengers. Interestingly, American was the first of the big carriers to institute a fee for all checked bags, back in 2008. The second- and third-most loss-prone were Delta Air Lines and Southwest Airlines.

The problem isn’t just lost luggage; it’s what happens next. The rules vary, depending on where you lost the bag and how long it takes to recover it.

Consider what happened to Sigal. After he filed a claim, LAN offered to pay him either $300 or cut him a $600 flight voucher. He refused both. “I feel that while in the custody of the airline, the suitcase was opened and the items were stolen,” he told me. “The reimbursement is not even close to the replacement cost of the items.”

Under the Montreal Convention, an international treaty that governs compensation for the victims of air disasters, Sigal was entitled to a maximum of about $1,800. (The amount fluctuates, because it’s based on a combination of worldwide currencies.)

I suggested that Sigal mention to LAN that its offer came nowhere near to what the Montreal Convention calls for. When he did, LAN asked for receipts for the stolen items, which he sent. The airline offered him about $1,800 in flight vouchers, which he accepted.

There isn’t always a happy ending, though. Earlier this year, reader Leonard Henderson contacted me after his ski gear got lost on a flight to Telluride, Colo. He had to buy new clothes, for which US Airways promised to reimburse him. But when the time came for the airline to pay up, it balked. Henderson had paid $2,500 for new gear, but the airline covered only $800.

“The airline will not give me an explanation of how they came up with the reimbursement figure,” he told me. “I feel like the tiny little guy versus the corporate giant.”

Part of the problem is that Henderson’s luggage was eventually recovered. According to federal law, the airline is liable for a minimum of $3,300 per customer if lost bags are never found.

But when luggage is delayed, the rules say that an airline must reimburse passengers for “reasonable” expenses caused by the delay, such as tuxedo rental for a wedding or purchase of underwear and toiletries, or a bathing suit at a beach resort.

US Airways’ policy is more noncommittal. “We’ll consider reimbursement for reasonable items such as toiletries while you’re waiting for us to return your property,” it says on its Web site.

Effective Aug. 23, new rules will require airlines to refund any fee for checked luggage if the bag is lost. However, the current requirements for compensating passengers for reasonable expenses won’t change, nor will the maximum compensation for lost luggage.

How do airlines persuade us to accept less? They ask for original receipts that they know we don’t have. They claim that they don’t cover fragile items, such as electronics and collectibles. They take forever to process our claims, dragging things out for so long that we forget what we lost.

For the past three years, checked luggage has been a huge profitmaker for air carriers. The industry collected more than $3 billion in baggage fees in 2010, compared with just $464 million in 2007, the year before the legacy airlines adopted a fee for the first checked bag. And for three years, the industry has essentially had it both ways — collecting our money and then losing our luggage without any meaningful consequences.

But that’s changing. Anticipating the new rule that will force airlines to reimburse baggage fees when they lose a piece of checked luggage, carriers have become more cautious about how they treat your property. The DOT last year fined Delta $100,000 for capping expense reimbursements on lost luggage. Perhaps not coincidentally, Delta recently introduced a new tracking system for bags that lets you follow your luggage online and presumably will ensure that fewer bags will be “misplaced.”

Wouldn’t it be something if the government also set minimum compensation amounts for passengers whose luggage just went astray for a day or two? I wonder how it would affect the mishandled baggage tally — and how it would move the needle on the billions of dollars in luggage fees the airlines collect every year.

34 thoughts on “How the airlines handle the ‘mishandled’ luggage problem

  1. I’m not defending airlines for those bags that are “mishandled” due to negligence or incompetence. There are many times bags are thrown on the wrong flight to the wrong destination because none of the baggage handlers involved bothered to read the destination tag. Fees should be refunded under those circumstances. However, delayed bags are frequently not the airlines fault. When a connecting flight is late and the connection time is reduced bags sometimes don’t make the connection. They arrive later. Often weather or flight cancellations cause passengers to be rerouted after their bags have been checked. It’s virtually impossible to notify the ramp when there are hundreds, maybe thousands, of passengers being affected. So, delays are not always controllable. However, when bags are misplaced and never found, or tagged to the correct city but sent somewhere else, or passengers baggage tags are switched at checkin by a careless agent, then compensation should be required. There has to be a distinction made.

    1. That might be so (though I’d argue otherwise) if the airline didn’t charged a fee to handle the bag.  Since it does, I think there’s an obligation to get the bag and the passenger to the destination at the same time, regardless of whether the airline is, strictly speaking, at fault. Once again, this industry needs close regulation by Congress and the groundswell of public anger is finally having an effect.

  2. Sorry folks but there is *huge* difference between PILFERED, DAMAGED, LOST and MISROUTED luggage.

    PILFERED means someone opened the luggage and STOLE something, This is definitely a CRIME. And it is happening in a supposed secure area (free of terrorists). This is just totally unacceptable.

    DAMAGED, LOST or MISROUTED, in theory should be 100% ‘trackable’ by the airline for as long as the bag tag is not missing. It bag tag scans are regularly made whenever the luggage moves locations, you can at least tell where the bag has been and where it was scanned last. The airlines can then take the appropriate action of how to right the situation.

    Note if the bag was dumped to a container, a scan associating the bag to a container ID could be made. Hence when the container moves as a whole unit, the container can also be scanned. At the time the container is opened (broken up), it can be scanned again to identify this activity. At least one knows WHERE the bag has arrived.

    Disclosure: I worked for FedEx for almost a decade (starting in the 80’s) and I am very familiar with the application of barcodes to track packages. FedEx can tell where your packages are (just take a quick look on the computer terminal and see where the last scan took place). FedEx uses the airport location codes similar to airlines. Why can’t the airlines do the same? The answer is simple – they just don’t care enough. FedEx did because achieving close to 100% reliability was essentially Fred Smith’s (founder or FedEx) business model.

    1. As soon as an airline collects a separate fee for handling your bags, airline regulations no longer apply. They are now a courier and the fee is a contract separate and distinct from one of passenger carriage. Their liability is no longer limited by law.

      1. I don’t think so.
        I think you are confused between ACCOMPANIED Baggage VS. UNACCOMPANIED Baggage. The fact that one pays a fee to check-in accompanied baggage does *NOT* disqualify it from being ACCOMPANIED BAGGAGE. It’s still ACCOMPANIED Baggage if it is accompanied by a passenger.  UNACCOMPANIED baggage is considered CARGO.
        Both Accompanied Baggage and CARGO are covered by the Montreal Convention.

        1. If they lose your luggage, it can be considered unaccompanied by definition. If it was accompanied, it wouldn’t be lost now, would it?

          I’m pretty sure that cargo pilfered in transit is the full financial responsibility of the carrier.

          1. Jim, the luggage you check in with your flight is ACCOMPANIED (by you) whether it gets lost or not.

    2. While I agree with you in theory, Tony, shippers are not infallible either. I can’t tell you the number of times where I’ve checked the tracking information on a package only to see that a scan was missed somewhere along the way.

      I also agree with Z44212: the airlines should not be profiting from their screwing up of luggage handling, and that if they’re going to collect fees from luggage, then they should be treated as a courier.

    3. while the technology certainly exists, everyone should know that not every airline uses it (usually claiming “the cost involved is too high”). as an airline employee who occasionally works the baggage desk, i really really really wish that some RFID or barcode or other method was used on every bag, every flight.
      other than that point, i agree with you.

      1. flutiefan, you hit the nail on the head! RFID is so cheap that Walmart uses it on their merchandise. All IATA has to do is to make available some SPECS that baggage manufacturers and tag manufacturers can use to create a unique, permanent BAG  ID. Every computer has an Ethernet MAC address, why can’t luggage have one, too? Then every airline can have an RFID scanner right there on the scale (at the counter). Once you weigh the bag, the reader can now read the bag’s unique id and associate it the BAG TAG’s own ID. When the association is created, the BAG is also associated with the passenger’s PNR. No matter what happens next, even if the bag is separated, any airport staffer (or scanner on the sorting belt) should be able to figure out WHO OWNS the bag and WHERE the bag should be.

    1. I can see it now. Sir, would you like to opt for our Luggage Tracking feature? For a mere $50, we can assure you as to where your baggage is at any given moment. If you do not wish to pay this optional fee, we’re sorry, but we cannot guarantee that your luggage will arrive either on time, or at the correct destination.

  3. It seems to me that if a fee is charged for checked baggage, a contract of bailment may well be created which might override FCC or other regulations. 

    1. I agree. Separate charge for luggage means that they have made a separate contract to carry your luggage – not covered by FAA regulations related to commercial passenger travel.

      1. Jim, if there is a SEPARATE contract, where is the AIRWAY BILL required by regulations?
        Obviously it is NOT a separate contract. Luggage Check In Fees for ACCOMPANIED BAGGAGE does not make luggage cargo.

  4. Here’s a story for you…
    A few weeks ago at IAH, I was waiting for my luggage on the belt. A guy came over with a few non-descript black suitcases and started carefully placing them on the belt while removing others that looked similar. Out of curiosity, I grabbed one of the ones I’d seen him place. It was remarkably light.Shortly after swapping out the three or four bags, the guy disappeared.It seemed really sketchy to me because in addition to all of that, he was not wearing any sort of airline or transport uniform.I told one of the useless security people down there but he was more interested in playing with his phone.

    1. That’s why no one in my family has nondescript black suitcases. It’s embarrassing sometimes, but when my bag comes down the belt, it’s orange or green and has bows on it. That way I ensure no one will ever take it by accident or “accident”.

    2. I don’t know why more airports don’t have secured baggage areas.

      I was at HNL once when I was going to be delayed waiting for another party to arrive on another airline. I mentioned it to an airline employee, and I was warned that they had a luggage theft problem at the airport, and I should get my bag quickly. I arrived late (the carousel was about to be shut off) and fortunately my bag was still there.

      I’ve been to some airports where the baggage areas are closed, and everyone needs to match a claim check to each large bag in order to get out. This is definitely the case on international flights. I do realize that it might be possible to rip off the claim tag on a carry-on sized bag that’s been checked in, but for the most part I would think restricting the baggage area to passengers might reduce luggage theft.

      1. I don’t know if this is still the case, but Dallas Love Field (home of Southwest Airlines) used to make you show your baggage ticket and ID to go into the baggage area.  No one got in there except the people who were supposed to be there.

      2. I agree; the baggage area should only be accessible to passengers. I believe it’s pretty much standard in Europe – the typical airport layout is designed around customs and immigration facilities because pre-EU and pre-Schengen you were not supposed to be able to just walk off into the street.

      3. it used to be that way in many airports.  then, a few years after 9/11, the airports decided they didn’t have the budget anymore to staff the claim area. that was one of the 1st areas they cut, unfortunately.  it really is too bad, since there certainly is an issue of unscrupulous people coming in and taking/swapping suitcases.  it also saved one of my friends.
        i picked her up at the airport, she got her bag, they checked her tag and we walked out. next thing we know, the “tag checker” was running after us, yelling at us to stop! my friend was confused, saying she had the right bag. until she opened it to find boxer shorts and aftershave. whoops!
        thank goodness for that alert woman, or else my friend would’ve had the wrong bag, someone would’ve been without their stuff, and we would’ve had to drive 45+ miles back to the airport to make things right.

        i wish airports still had this policy and staff!

      4. “I don’t know why more airports don’t have secured baggage areas.”

        Because the only thing our government (and by extension TSA) and the airlines care about is making sure that the planes land safely.

        Everything else is an afterthought. ‘Your luggage was stolen from the luggage carousel? Not our problem.’

        1. It’s up to the airport to set up that kind of baggage claim area, and to staff them.  I don’t know if it’s a single government issue per se.  Most airports are run by quasi-governmental agencies.

  5. You charge you take and you loose it then YOU PAY FOR IT IN FULL!  Yes if I were to charge someone a fee, take their property, loose it then yes as a business you refund each and every time.  That’s That.  

  6. Chris, I’m almost positive you should say a maximum, not a minimum in this sentence:

    According to federal law, the airline is liable for a minimum of $3,300 per customer if lost bags are never found.

    If they really have to pay me at least $3300, I’m going to start checking extra empty suitcases and hope they disappear!

  7. For those people who think adding additional regulations to the Airline industry for handling baggage (no matter how deserved they may be), be aware that the Law of Unintended Consequences may very come into play here:

    I suspect that the airlines will just as likely decide to stop handling checked luggage altogether. If you have stuff you want to take with you, you can either ship it as Air Cargo (at dramatically-higher Air Cargo rates) or use a third-party service.

    And, to add one final “Eff You!” to regulators and traveling public, get ready for a push by the airlines to either remove the overhead bins, or restrict their use exclusively to premier customers only. No doubt claiming that it would improve safety and passenger boarding…

  8. I’ve always said that if the airlines are going to start charging for baggage, then luggage is not part of your ticket, instead it is being shipped to your destination as cargo and as such should be afforded the same protections as a package being shipped through UPS or Fed-Ex which means that they should reimburse you for the actual cost of the items in your luggage.

  9. Flew on Delta through Atlanta, to Las Vegas. Was forced to check my carry on, because of full overhead bins. When it “clicked” that some of my money was in the bag, and I should have it with me, the door had been closed, and we were pushing out. Arrival in Vegas and I was waiting when the bags dropped on the belt. A quick check confirmed my fear. A Delta worker had been through my bag, and stole my stuff. Filed a report with Delta and police, but the forms are probably used to level the foot of the breakroom table where the donuts sit. Fliers are victimized twice. Once by the company theif, and the second time by the company that doesn’t care !

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