The annual SITA Baggage Report highlights areas where airlines could improve their baggage-handling systems, which currently manage the transportation of 2.25 billion pieces of checked luggage a year.
Francesco Violante, SITA chief executive, said, "Once again, the past year has seen an increase in the amount of baggage mishandled worldwide. It also brings fresh hope, however, in the shape of new initiatives such as IATA's Baggage Improvement Programme.
He said, "It is important that we continue to move towards a comprehensive, fully integrated global baggage-management system that can direct, track and trace passenger baggage throughout the entire journey from check-in to final delivery at the destination.
"RFID also has a role to play and could save the industry as much as £350m a year if it was fully implemented across the industry."
Giovanni Bisignani, International Air Transport Association (IATA) director general and chief executive, said, "We get baggage right 98% of the time. But with a total volume of 2.25 billion bags in the system, the 2% that is mishandled is a big problem we need to fix.
"IATA has developed a toolkit of 40 solutions to address the prime causes of baggage mishandling. IATA Baggage Go Teams will visit targeted airports spreading best practice matched to local needs."
According to this year's SITA Baggage Report, the air transport industry lost £1.9bn in 2007 because of growing pressure on baggage management linked to rising passenger volumes, tight aircraft turnaround times and heightened security measures.
WorldTracer, SITA's automated system for tracing lost and mishandled passenger baggage, shows 42.4 million bags were mishandled or delayed in 2007.
This year's figures may be higher because of the problems experienced by British Airways at Heathrow Airport's new Terminal 5.
Last year, the single largest cause of baggage delay was transfer baggage mishandling (49%), but this figure has been falling steadily since 2005, when it stood at 61%.
Other causes of delay were: failure to load (16%) ticketing error/passenger bag switch/security/other (14%) arrival station mishandling (8%) space-weight restriction (5%) loading/offloading errors (5%) and tagging errors (3%).