My favorite lines:
... there are two worlds, the worlds that the customer goes in and the world of the processes, like baggage handling.
... we must make more capacity available by making the system smarter.
At first blush it seems that this type of operational efficiency improvement has little to do with the "experience" of a customer since the customer is not directly being processed. However, we all know that after a long day of flying the worst thing that an airline could do is say that your bag is in the Bahamas (unless you are in the Bahamas - in which case good for you...) Worst still, is that this type of service failure becomes apparent to the customer at the END of the experience. My research suggests that that is the worse possible time for such a low point in the experience. So, its easy to see that although this is clearly not a customer facing operation, it has dramatic impact on the overall experience of flying.
Further thoughts: it might be interesting to consider if the timing of when to tell a customer that their bag is not going to be at their final destination upon arrival will have impact on service recovery aspects. Again, research suggests that if you have bad news for a customer, you should give it to them early on as opposed to later. Similarly, steps could be taken to facilitate the service recovery before landing perhaps expediting the final stages of the flying experience further enriching the recovery efforts. I would imagine that the capability to do this exists in most modern airlines, but little along these lines are attempted.