Latest news with #checkedBags
Forbes
27-05-2025
- Business
- Forbes
How Much Will Southwest Airlines Make Off Charging For Bags?
Southwest Airlines will begin charging for checked bags starting May 28th, 2025. In case you missed it, Southwest Airlines announced earlier this year that it will end its long-standing free checked bag policy—which has been in place since the airline's inception in 1967—and begin charging customers on May 28th. It wasn't clear how much checking a bag on Southwest Airlines would cost at first. But now, the airline has revealed that the first checked bag will cost $35 and the second piece will be $45. Any flight booked on or after May 28th will now incur the bag fees. Any flight booked prior to May 28th will still be granted two free checked bags. Due to financial and operational issues, Southwest has slowly been rolling back some of its long-standing, industry-differentiating policies, such as free checked bags and open seating. The idea behind the change is to increase ancillary revenue by charging for bags and selling premium seats. We don't yet know enough about what the new seating classes (starting in 2026) will look like on Southwest, but now that we know the price of checked bags, we can estimate how much Southwest will benefit from the change. Southwest has priced its bags similarly to industry competitors like American, Delta, and United. Each of those airlines earned a billion or more on checked bag fees in 2024. American collected $1.5 billion, with United ($1.3 billion) and Delta ($1 billion) not too far behind. According to CNN, Southwest had two to three times as many checked bags as some of these airlines, which means that profits could eclipse the above numbers. However, it's likely that the airline will see less checked bags overall now that they will be charging for them—how much less remains to be seen. If checked baggage rates remain relatively stable, Southwest could be in for a big pay day. But at the very least, we can expect them to pocket about a billion from bags alone, even if the checked bag rate drops off a bit. If it does, Southwest passengers should expect more competition for overhead space onboard. This reality could also drive demand for the premium seat classes, which will debut in 2026 and no doubt include priority boarding.
National Post
27-05-2025
- Business
- National Post
This airlines is getting rid of free checked bags
Article content It's the last day to book a flight on Southwest Airlines without being hit with a fee to check bags after the airline abandoned a decades-long luggage policy that executives had described last fall as key to differentiating the budget carrier from its rivals. Article content The airline announced the change in March, saying at the time that the the new policy would start with flights booked on Wednesday. Article content Article content Southwest said Tuesday that it will be charging US$35 for a first checked bag and US$45 for a second checked bag. Weight and size limits will apply for bags. Article content Article content Southwest had built years of advertising campaigns around its policy of letting passengers check up to two bags for free. Under its new policy, people who haven't either reached the upper tiers of its Rapid Rewards loyalty program, bought a business class ticket or hold the airline's credit card will have to pay for checked bags. Article content Southwest will continue to offer two free checked bags to Rapid Rewards A-List preferred members and customers traveling on Business Select fares, and one free checked bag to A-List members and other select customers. Passengers with Rapid Rewards credit cards will receive a credit for one checked bag. Article content People who don't qualify for those categories will get charged to check bags. The airline said in March that it also would roll out a new, basic fare on its lowest priced tickets when the change takes effect. Article content Article content The airline estimated in September that charging bag fees would bring in about $1.5 billion a year but cost the airline $1.8 billion in lost business from customers who chose to fly Southwest because of its generous baggage allowance. Article content Article content Another policy that will take effect on Wednesday is Southwest requiring passengers to keep their portable chargers in plain sight while using them because of concerns about the growing number of lithium-ion battery fires. Article content These aren't the only changes at Southwest. The Dallas airline previously announced that it was leaving behind another Southwest tradition, the open-boarding system it has used for more than 50 years. Southwest expects to begin operating flights with passengers in assigned seats next year. Article content The airline also said last year that it would charge customers extra for more legroom and offer red-eye flights. Article content Southwest has struggled recently and is under pressure from activist investors to boost profits and revenue. The airline reached a truce in October with hedge fund Elliott Investment Management to avoid a proxy fight, but Elliott won several seats on the company's board. Article content The airline announced in February that it was eliminating 1,750 jobs, or 15% of its corporate workforce, in the first major layoffs in the company's 53-year history. Article content
Skift
27-05-2025
- Business
- Skift
Southwest Reveals Pricing Plan for Checked Bags
Southwest is framing this as offering "choice," but the move marks a clear pivot toward industry norms, potentially alienating loyalists and opening the door for rivals to poach disillusioned travelers. In March, Southwest Airlines announced it would scrap its decades-long 'Bags Fly Free' policy. We knew the change would come into effect on May 28, but details around pricing remained a mystery until now. Less than 24 hours before it goes into effect, details of the pricing structure have started to emerge. From Wednesday, the low-cost carrier will charge passengers $35 for one checked bag, and $45 for a second. Exceptions will apply for some customers. The figures, first reported by the Wall Street Journal, were shared with Southwest staff in a company memo. However, no formal public statements regarding the new pricing plan have yet been made. The airline's FAQ page continued to read as of Tuesday morning: 'Our checked bag fees will align with industry standards, and we will share more details as we approach May 28, 2025.' There are a handful of carve-outs for the new charges. Southwest Rapid Rewards A-List Preferred members and passengers traveling on Business Select fares will continue to have an allowance of two checked bags. Those flying on other Select fares and A-List status members will be able to check in one bag without extra charge. Customers booking Southwest's top fare category will also be allowed to bring two checked bags at no additional charge. The $35 and $45 fees are broadly in line with Southwest's domestic competitors. All Change at Southwest In March, Southwest said the move would create choice for customers, as well as 'support business objectives.' To coincide with the changes, Southwest is also launching a new Basic fare for its lowest-price tickets booked on or after May 28. This will be the most restrictive option and comes ahead of the carrier introducing assigned seating on its aircraft. Competitor reaction to the original announcement in March focused on an opportunity to win over disillusioned Southwest loyalists. Delta president Glen Hauenstein said he believed there are now Southwest customers that are "up for grabs." "We'll see how that plays out over the next period of time as they continue to implement multiple changes to their products," he said at a JPMorgan conference. Meanwhile, United CEO Scott Kirby said bag fees would make Southwest "more competitive," but will impact "low-end customers." "I think it will raise the tide for Southwest across the board," Kirby said at the same event. "The relative margins will be worse in competitive markets because it will cause some customers at the margins to switch to competing airlines." However, Kirby added that he believed the change made Southwest "a results-driven airline than it's been before. I think the far bigger thing is like it's the slaying of a sacred cow," Kirby said. Southwest's Broader Overhaul The changes mark the latest phase in a transformative year for Southwest. The low-cost airline is upending its business model following a bitter battle with activist investor Elliott Investment Management. After building a nearly $2 billion economic stake in Southwest, the hedge fund pushed for a senior leadership overhaul. Ultimately, the two companies reached a settlement to give Elliott five board seats — just short of control — while Bob Jordan remained as CEO. The baggage changes are widely seen as a signal of the hedge fund's influence on the carrier. Other distinctive features such as its open seating system and boarding method are also changing. Other moves include the addition of extra legroom seats and the introduction of red-eye flying on select routes. Speaking at the Skift Aviation Forum last November, CEO Bob Jordan emphasized why the carrier's approach made it distinctive from competitors: "We have had the industry's best set of customer-leaning, customer-friendly policies forever,' he said. Policies mentioned by Jordan at the time included Southwest's credits and Rapid Rewards points that don't expire and no fees for checked bags – all areas that have since been overhauled. 'We have been the champion for the consumer and the customer from the start, hands down, period,' Jordan told Skift. Skift has contacted Southwest Airlines for additional details about the new baggage fees. Watch Southwest CEO, Bob Jordan, at the Skift Aviation Forum 2024: recorded november 2024. 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.
