Southwest Waves Goodbye to "Bags Fly Free" Era
Southwest Airlines is abandoning one of its most distinctive features: free checked bags. The carrier announced Tuesday it will start charging for the first and second checked bag beginning May 28, ending a six-decade tradition that set it apart from competitors."We have tremendous opportunity to meet current and future customer needs, attract new customer segments we don't compete for today, and return to the levels of profitability that both we and our shareholders expect," said Bob Jordan, CEO of Southwest, in a press release.The move marks a dramatic shift for an airline that built part of its identity around not nickel-and-diming passengers. Southwest even trademarked the "bags fly free" slogan, making it central to its marketing campaigns while competitors piled on fees.Jordan's position on bag fees has evolved rapidly. During an analyst call last year, he insisted the policy wasn't changing, noting that "after fare and schedule, bags fly free is cited as the number one issue in terms of why customers choose Southwest." As CNN reports, the airline will exempt certain customers from these new fees, including members of its A-List loyalty program, Southwest-branded credit card holders, and those traveling on business fares.The airline hasn't revealed specific pricing for the new fees, but the impact could be substantial. Despite not charging for the first two checked bags, Southwest still collected $73 million in baggage fees in 2023 and $62 million in the first nine months of 2024, according to Department of Transportation data. That's a fraction of what competitors earn—American Airlines collected $1.4 billion in 2023, United Airlines $1.2 billion, and Delta Air Lines $985 million.Competitors wasted no time capitalizing on the announcement. Delta CEO Ed Bastian said at an investors conference Tuesday that Southwest's decision could benefit rivals: "Clearly there are some customers who chose them because of that (bags fly free policy). Now clearly those customers are up for grabs."
United CEO Scott Kirby was more direct: "It'll be good for everyone else. It's the slaying of a sacred cow. I view it as a big deal."The baggage fee announcement is just the latest in a series of changes since activist investor Elliott Investment Management took a $1.9 billion stake in Southwest last year. The airline is also introducing assigned seating, premium seats, and red-eye flights—all features of traditional carriers it once proudly stood apart from.Last month, Southwest cut 15% of its corporate workforce, eliminating 1,750 jobs in the first mass layoffs in company history. The company estimates these cuts will save $210 million this year and $300 million in 2026.Southwest shares jumped more than 6% in Tuesday trading following the announcement.
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