If you want the true underlying reason, I think the answer is that they don't care. I don't mean that any individual employee doesn't care, but AC corporately just doesn't seem to think their poor performance in this area, like their OTP, is impacting profitability - at least not enough to spend the money on fixing the issue.

I'll point out that somewhere in recent months, AC was advertising its baggage delivery rate as 98%. Around the same time, DL's was 99.8%. Those don't sound terribly different until you realize that AC's 2% rate of delayed/lost bags is 10x DL's 0.2% rate.

One of those airlines has a customer baggage delivery guarantee of 20 minutes (if your bag isn't delivered in that time, you get some points as compensation). The other has no published service standard, as far as I can tell.

The fact that DL isn't bleeding huge amounts from this bag guarantee compensation suggests that senior management identified this as an issue, developed a metric that they felt was meaningful to hold themselves accountable to their customers, and presumably made whatever investments/process adjustments were necessary internally to achieve it.

I'm sure that someone at AC would talk about how terrible certain Canadian airports are for baggage, but I'm also sure many of the same issues exist at US airports, and AC and DL fly to many of the same airports.

AC undoubtedly has a Director or VP of Baggage Services or something like that who has KPIs to meet, but without a push from the top and allocation of sufficient resources (both human and financial), I doubt that we'll see much change.

That doesn't mean AC has to introduce a customer guarantee the way DL did, but having a big public target like that does wonders to keep everyone focused.

Beyond that, though, does it really matter whether AC hires too few baggage handlers, or the baggage systems at Canadian airports are badly designed, or whatever? Sure, it would be easier for AC to fix its own issues if it were in a place like Australia that seems to generally treat this as important, but DL accomplished huge improvements even in a much less favourable locale. If AC truly wanted to solve it, they probably could.