A Turning Point for Southwest
Southwest Airlines, whose iconic “Bags Fly Free” policy has been a brand mainstay for nearly 60 years, is taking the dramatic step of charging for checked bags. Beginning May 28, customers will pay extra for their first and second checked bags, reversing a long-held policy.
Why the Change?
Southwest CEO Bob Jordan cited the necessity of capturing new customer bases and improving profitability as primary drivers for the shift. Historically, Southwest differentiated itself from other large U.S. carriers by not charging for checked bags while its competitors raked in billions of dollars in baggage fees. But consumer trends change and new visions for leadership have led Southwest to catch up with the industry norm.
Jordan had previously assured investors that charging for baggage wasn’t under consideration, emphasizing that it was a major factor in why passengers chose Southwest. However, after expanding ticket sales to third-party platforms like Kayak and Google Flights, the airline noticed that price was the primary driver of customer decisions, rather than perks like free bags.
Impact on Passengers
The new baggage fees won’t apply to all travelers. Exemptions will be granted to:
- A-List loyalty program members
- Southwest-branded credit card holders
- Business fare ticket holders
However, for regular customers, this move may influence their choice of airline, especially since Southwest has historically encouraged passengers to check bags instead of carrying them onboard to improve boarding efficiency.
Airline Industry Reactions
Competitors view this move as an opportunity. Delta CEO Ed Bastian stated that Southwest’s decision could drive some passengers to rival airlines that already charge for baggage but offer other incentives. United Airlines CEO Scott Kirby called it “the slaying of a sacred cow,” signaling a major shift in the budget airline sector.
Broader Changes at Southwest
This is part of a broader change at Southwest, which was spurred by activist investor Elliott Investment Management. Other recent changes include:
Phasing Out Open Seating: Southwest is introducing assigned seating, dropping its signature boarding process.
- Premium Seating Options: The airline will introduce pricier seats with more features.
- Basic Economy Fares: As with other airlines, Southwest will begin selling lower-priced fares with restrictions.
- Job Cuts: Southwest recently slashed 15% of its corporate workforce in an effort to cut costs.
What’s Next for Southwest?
While increased baggage fees will boost Southwest’s bottom line, the long-term impact on customer loyalty remains uncertain. As passengers become accustomed to these changes, Southwest will have to balance its new profit-driven strategy with the brand identity that made it a favorite among bargain-basement flyers.
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