Southwest Airlines Redefines Its Legacy by Charging for Checked Bags and Revamping Services
Months after implementing a shift from its open seating policy, Southwest Airlines has decided to end one of its most iconic benefits: free checked baggage. Starting May 28, the airline will begin charging passengers for their first and second checked bags, as announced on Tuesday. However, members of the A-List loyalty program and those flying with business fares will still enjoy the perk of free checked bags.
The change marks a significant departure from the airline’s longstanding tradition of offering free checked baggage, a policy in place since its inception nearly 60 years ago. This benefit became a hallmark when competitors started imposing fees, embodied in Southwest’s trademarked slogan, “bags fly free,” which has been central to its marketing strategy.
Last year, CEO Bob Jordan reassured investors that the airline had no intentions to charge for the first two checked bags, noting it’s a “major draw” for customers choosing Southwest. “Besides airfare and schedule, ‘bags fly free’ is the top reason why customers select Southwest, and it is not something we are considering changing,” he remarked.
Jordan also highlighted that charging for baggage comes with additional logistical costs, potentially delaying boarding as passengers seek overhead bin space for carry-ons. Occasionally, excess bags must be relocated to the cargo area.
Southwest has yet to disclose the new baggage fees. Regardless of the pricing, the change is poised to bolster the airline’s financial performance, given that its volume of checked bags is two to three times that of its competitors.
In 2023 alone, Southwest collected $73 million in baggage fees, with another $62 million during the first nine months of 2024, based on figures from the Department of Transportation. These amounts are modest compared to other airlines, such as American Airlines, which amassed $1.4 billion in baggage fees in 2023, while United Airlines earned $1.2 billion and Delta Air Lines $985 million.
Rival airline executives, like Delta CEO Ed Bastian, foresee the change as an opportunity to sway Southwest’s clientele. “Clearly, many customers opted for them due to that [bags fly free policy],” Bastian observed, “and now those customers might consider alternatives.”
Shares of Southwest (LUV) saw a 9% increase in premarket trading following the announcement.
Changes at Southwest
Recently, Southwest has undergone a series of transformations since Elliott Investment Management acquired a $1.9 billion stake in the airline last year. The activist investor pushed for leadership shifts and operations restructuring to heighten profitability.
The airline is set to introduce several key changes, including assigned seating and premium seats, aligning itself more closely with traditional carriers. Red-eye flights have also been introduced in response to customer demand. Customers departing for competitors often cite open seating as the main reason, and these amendments may enable Southwest to charge premium fares to specific passengers.
Moreover, Southwest now sells tickets on Expedia, expanding beyond their longstanding exclusive sales on Southwest.com, to broaden its customer reach.
Effective in May, Southwest will also roll out “basic economy” fares, offering lower-priced tickets with stringent restrictions.
Last month’s reduction of 15% of its corporate workforce, amounting to 1,750 employees, marked the airline’s first major layoff. This measure is projected to save $210 million this year and $300 million by 2026.
Southwest welcomed a new chief financial officer, Tom Doxey, who previously held the role of president at Breeze Airways. Meanwhile, Tammy Romo, the former CFO, and Linda Rutherford, former chief administration officer, plan to retire this April.
This story contains updates with additional information.
CNN’s Chris Isidore also provided insights for this report.