Keep in mind that being an international flight, lost luggage is covered by the Montreal Convention which is an international agreement concerning damages on international airline flights. This is the 'law' the airlines must live within. On lost/delayed luggage, wiki says this:
The Montreal Convention changes and generally increases the maximum liability of airlines for lost baggage to a fixed amount 1131 SDR per checked item (the amount in the Warsaw Convention is based on weight of the baggage). It requires airlines to fully compensate travelers the cost of replacement items purchased until the baggage is delivered, to a maximum of 1131 SDR. At 21 days any delayed baggage is considered lost, even if the airline delivers it after that period.
You can read more at
http://en.wikipedia.org/wiki/Montreal_ConventionScuba1 wrote:
One of the reasons you are compensated by the pound for lost luggage - otherwise people would file claim's stating their luggage was full of diamonds
This is one part of the Warsaw Convention that was changed by the Montreal Convention. Bags are now valued at 1131 SDR (Special Drawing Rights) no matter the weight or 'claimed' contents. I'd love to explain what SDR is but it is too complicated for me. Wiki link here :
http://en.wikipedia.org/wiki/Special_drawing_rights