OK - what is the problem here? There is losing luggage in the first place - not sure why that happens (probably something airlines have lots of data on), then there is tracing and retrieving it after the loss. Which part of the problem does this idea solve?

If the latter, why not just have a franchise desk at every major airport and railway station which can cross-reference these geotags (knowing what is in their local location) vs a list of luggage reported as lost by users (i.e. passed onto the company by the airline, perhaps via a button in their app). With the right access permissions on the ground, the company could go fetch the luggage from lost property / storage and either make it available for collection on demand by the user, or send it on somewhere else for a price. Figure out the pricing and off you go.