1) What airlines do with unused baggage allowance assigned to passengers? For example, if only 100 out 150 pax used their 20 kg baggage allowance and the rest did not use it (did not check in any baggage). What do airlines do with the unutilized weight? Do they load more freight matching the unutilized weight?
for practical/logistic reasons they would be unlikely to load more freight as passenger baggage is more or less last on, and it's done at the gate from which the aircraft departs. Loading freight would cause a delay.
2) How do airlines predict/forecast passenger baggage allowance utilization?
Based on past statistics, they know that on a given route and given day, there will be 'x' passengers of 'y' weight and on average each will carry 'z' kilos of baggage. Forecasting is never an exact science.
As passengers check in, the weight of their baggage finds its way through the DCS onto the loadsheet which is important for correct balance and trim, it is safety critical. That is one of several reasons why, if a passenger turns up with a 30 kilo suitcase, the check in agent can't register it as 20 kilos. If they did that for every passenger on a 150 seat aircraft, there would be 1.5 tonnes of additional weight on board that would not be reflected on the load sheet and that the cockpit crew would not know about.
3) Are there any data available on the average baggage allowance usage numbers - on avg how many pax use their
baggage allowance (fully /partially)?
Yes, but as stated earlier, it is commercially sensitive and I doubt if it exists in the public domain.