Southwest Airlines Will Charge for Checked Bags for First Time

Groundbreaking Changes at Southwest Airlines: A Shift in Customer Perks

It’s happening: Southwest Airlines will start charging passengers to check bags for the first time.

This stunning reversal shows the low-cost pioneer is willing to part with a customer perk executives have said set it apart from rivals for more than half a century of flying in hopes of increasing revenue.

Southwest’s changes come after months of pressure from activist investor Elliott Investment Management, which took a stake in the airline last year and won five board seats as it pushed for quick changes at the company, which held on for decades to perks like free checked bags, changeable tickets, and open seating.

For tickets purchased on or after May 28, Southwest customers in all but the top-tier fare class will have to pay to check bags, though there will be exceptions. Elite frequent flyers who hold A-List Preferred status will still get two bags, and A-List level members will get one free checked bag. Southwest credit card holders will also get one free checked bag.

"Two bags fly free" is a registered trademark on Southwest’s website. But its decision to about-face on what executives long cast as a sacrosanct passenger perk brings the largest U.S. domestic carrier in line with its rivals, which together generated more than $5 billion from bag fees last year, according to federal data.

Southwest didn’t say how much it plans to charge to check bags, but a single bag costs $35 to check on Delta, American, and United.

Southwest shares rose 8% Tuesday after its baggage fee announcement and investor update, while other large carriers’ shares and the broader market fell.

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Southwest executives have long said they didn’t plan to charge for bags, telling Wall Street analysts that it was a major reason why customers chose the airline.

At an investor day in September, Southwest said that it would gain between $1 billion and $1.5 billion from charging for bags but lose $1.8 billion of market share. Southwest said its "rigorous research" found that "our ‘bags fly free’ policy generates market share gains in excess of potential lost revenue from bag fees."

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Conclusion

Southwest Airlines’ decision to charge for checked bags marks a significant shift in its business strategy. The move is likely to impact customer behavior and loyalty, and may lead to a re-evaluation of the airline’s competitive position in the market. As the airline industry continues to evolve, it will be interesting to see how Southwest’s decision plays out and what impact it has on the broader industry.

Frequently Asked Questions

Q: Why is Southwest Airlines charging for checked bags?
A: Southwest is charging for checked bags to increase revenue and reduce costs.

Q: How much will Southwest charge for checked bags?
A: The airline hasn’t announced its bag fees, but a single bag costs $35 to check on Delta, American, and United.

Q: What are the exceptions to the bag fee?
A: Elite frequent flyers who hold A-List Preferred status will still get two bags, and A-List level members will get one free checked bag. Southwest credit card holders will also get one free checked bag.

Q: How will this change affect customer behavior and loyalty?
A: It’s too early to tell, but the change may lead to a re-evaluation of customer loyalty and behavior.