A significant portion of American Airlines (AA) and American Eagle (AE) financial loss experienced at Washington Reagan National Airport (DCA) in the past years is due to the inefficiency in baggage handling, routing processes and associated security costs at DCA. The objective of this thesis is to analyze the impact of Information Technology (IT) on airport baggage routing and security. Based on an economic analysis of the detailed AA and AE daily baggage traffic flows and baggage routing process data we collected at DCA, we not only identified several areas of operational inefficiency in the baggage handling process, but also quantified the benefit of IT investment in improving the process efficiency. These findings provide important insights into major areas of inefficiency and technology investment in the baggage handling operations by American Airlines. We also generalize our findings to make applicable suggestions and practical recommendations on baggage issues for the aviation industry.