Latest news with #bagfees
Yahoo
09-08-2025
- Business
- Yahoo
Southwest Didn't See More Profit After Ending Free Bags
Earlier this year, Southwest Airlines made the controversial decision to end its longstanding "bags fly free" policy as the airline began charging customers for each checked bag in an attempt to boost slumping profits. However, it doesn't sound like the move boosted profits the way the airline had hoped. In May, Southwest Airlines officially began charging for checked baggage, with the first bag costing travelers $35 and an additional bag costing $45. While the airline rolled out the new fees in an attempt to boost profits, it doesn't sound like it's actually worked out that way. On a Q2 2025 earnings call last week, Southwest Airlines Chief Operating Officer Andrew Watterson had a rather telling admission about the new bag fees as he admitted that the airline 'did not see a measurable customer impact in the period between the announcement of these changes back in March and the implementation in late May.' Southwest Airlines posted second-quarter earnings that were not exactly optimistic. According to CNBC, Southwest Airlines posted net income of $213 million, which is down 42 percent over last year. In fact, if anything, it sounds like the new bag fees led to more problems for Southwest, with Watterson admitting 'a temporary decline in bookings, primarily in basic economy' in the days following the rollout of basic economy on May 28, according to Customer Experience Dive. Watterson said that Southwest has made efforts to combat this decline. 'There has been an ongoing effort to optimize the product descriptions and the basic economy booking flow, which initially included barriers to booking basic economy that resulted in reductions in overall website conversion,' Watterson said last week. While many customers quickly expressed their displeasure at the decision to end free bags and it does not seem to have made the financial impact the airline would have hoped, Southwest Airlines CEO Bob Jordan has consistently defended the move. "I know that we have some that are not happy - and we have many, many, many that are happy," he said last month. "You have to keep talking because sometimes people don't understand what you're doing. What I find is that once folks know where we're headed, they're very excited. I think you just have to play through this period of change because change is hard." Despite the outrage, it sounds like Southwest is committed to charging for checked bags. Southwest Didn't See More Profit After Ending Free Bags first appeared on Men's Journal on Aug 3, 2025
Wall Street Journal
31-07-2025
- Business
- Wall Street Journal
I'm Calling It. Southwest's New Seat Policy Is Just a Money Grab.
Southwest is officially just another airline. The transformation of the nation's largest domestic carrier by passengers, the one that ridiculed rivals' fees for years, began when it added bag fees in late May. Its new status was cemented on Tuesday when it started selling flights with assigned seats for travel beginning Jan. 27.
Travel Weekly
27-05-2025
- Business
- Travel Weekly
Southwest enters a new era with bag fees and other policy changes
Bag fees will go into effect at Southwest Airlines on Wednesday, May 28. The carrier, which long made its bags-fly-free policy a centerpiece of its commercial offering, will charge $35 for the first checked bag and $45 for a second bag. The fees will apply to flights booked or voluntarily changed on or after May 28. Under the new policy, holders of a Southwest co-branded credit card and flyers with Rapid Rewards A-list status will be entitled to one free checked bag. Travelers who book Southwest's top-level fare, Business Select, will continue to get two free checked bags, as will those with Rapid Reward A-list Preferred status. Southwest effective May 28 also is introducing a branded basic economy fare, Basic, which replaces the carrier's longstanding low-end option, Wanna Getaway. Once Southwest moves to assigned seating, expected to happen early next year, the Basic fare will resemble other basic economy products in the industry, with those ticket holders only receiving a seat assignment upon check-in and being last to board. Also, Southwest's policy of awarding flight credits that don't expire will end on May 28. Instead, issued credits will expire after a year. The elimination of free checked bags marks the end of an era for Southwest and the U.S. airline industry. Southwest is implementing bag fees 17 years after the other major U.S. carriers started charging for checked bags.
Skift
27-05-2025
- Business
- Skift
Southwest's Overhaul: New Bag Fees, Seating Changes – What's at Stake
Southwest's most iconic perk ends Tuesday. While Southwest has received flak from customers, executives hope bag fees will shore up profitability. A beloved perk among Southwest customers is coming to an end on Wednesday: No more free checked bags. Soon, it will cost customers $35 for a first checked-in bag and $45 for the second. Southwest made the monumental decision to charge bag fees in March following a series of other major changes to its business model. Bag fees had long been one of Southwest's biggest differentiators from other airlines, and executives at the company had stressed that the policy was beneficial to Southwest's bottom line. 'We're not looking at this point to change that policy," Southwest CEO Bob Jordan said during an earnings call last July. "Our industry-leading set of initiatives of customer-friendly policies, and you know the list, is a big part of what attracts people to Southwest Airlines. And after fare and schedule, bags fly free is cited as the #1 issue in terms of why customers choose Southwest." The decision to start charging bag fees was met with pushback from customers, but Wall Street and airline executives welcomed the news: Analysts for the potential revenue boost, other airlines for competitive reasons (Delta president Glen Hauenstein said Southwest customers would now be 'up for grabs.') What Is Changing at Southwest? Southwest will officially start charging for two checked bags on Wednesday. Customers who book Southwest flights on Tuesday will not be charged for checked bags, regardless of the travel date, according to a spokesperson for the company. The first checked bag will cost $35 and the second will cost $45. Who Do Bag Fees Apply to? The baggage fees apply to those flying basic economy, along with Southwest's Wanna Get Away Plus and Anytime fares. Customers who are flying on Business Select or are Southwest Rapid Rewards A-List Members will still be able to check in two bags for free. A-List members and Rapid Rewards credit cardholders will receive one free checked bag. Southwest will also start selling basic economy fares on Wednesday, replacing its Wanna Get Away fare. Customers cannot make free changes or receive same-day standby tickets with the basic economy fares. What About Assigned and Premium Seating? Another set of major changes coming to Southwest is assigned seating and premium seating. The carrier was long known for its open boarding process, but executives said that they found customers preferred an assigned boarding process and the option to book premium seats. Southwest expects to start operating flights with assigned seats in 2026 and will also start charging seat selection fees. Premium seats will be denoted by a light blue top and will also have deeper cushions and longer headrests. Why Is Southwest Making These Changes? Much of these sweeping changes come after Southwest's bitter battle with activist investor Elliott Investment Management, which had built a nearly $2 billion stake and won five seats on the company's board. The hedge fund had advocated for major leadership changes at Southwest, along with bag fees, assigned boarding and premium seats. Southwest also conducted its first-ever layoffs in February, slashing 15% of its corporate workforce. Ending its two bags fly free policy is a risk for Southwest. When the news first became public in March, customers took to social media to express their displeasure with the change. Since the announcement, most of Southwest's social media posts are filled with customers complaining about the recent changes. Southwest also hasn't posted anything about bag fees on its social media since the announcement. However, during Southwest's most recent earnings call in April, chief operating officer Andrew Watterson said the company had not seen a dip in bookings. Executives at the company argue that these changes are necessary for Southwest to remain competitive and shore up its profitability. More airlines have recently started increasing their baggage fees, citing inflation and rising operating costs. Airlines also raked in $7.3 billion from baggage fees in 2024, according to the Bureau of Transportation Statistics. What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies. The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more airlines sector financial performance. Read the full methodology behind the Skift Travel 200.
