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Checked baggage fees appear to be helping airline bottom lines in more ways than one.

According to the annual baggage report from SITA, the global airline data and communications firm, the worldwide incidence of mishandled baggage has been halved in the last five years, from 18.8 incidents per 1,000 passengers to nine -- a decline that likely reflects the tendency of passengers to check fewer bags these days.

According to SITA, the cost of dealing with mishandled baggage, including delay, damage or outright loss, averages out to about $100 per bag. So it was good news that the number of mishandled bags last year fell from 32.3 million to 25.8 million. That's 6.5 million fewer mishandled bags, and it represents a savings of $650 million compared with 2010. That's the good news.

But at $100 a pop, 25.8 million mishandled bags still means a cost to the industry of nearly $2.6 billion on a global basis, or nearly a third of the global industry's cumulative net profit last year of $7.9 billion. Ouch.

Curiously, SITA also reported that more than half of mishandled bags are making a connection. In fact, the number is now 53%, up from 49% in 2008. Despite all the talk about improved cooperation among airline alliance partners and seamless service, the risk of a baggage mishap on a connecting flight seems to be increasing.

Ouch again.