Latest news with #customerchoice
Forbes
09-07-2025
- Business
- Forbes
CEO Defends Southwest Baggage Policy Change To Frustrated Customers
DALLAS, TX - SEPTEMBER 26: Bob Jordan, CEO of Southwest Airlines, speaks to media during Southwest Airlines Investor Day at Southwest Airlines Headquarters on September 26, 2024 in Dallas, Texas. (Photo by Sam Hodde for The Washington Post via Getty Images) The Washington Post via Getty Images Southwest Airlines CEO Bob Jordan recently sat down with the New York Times to discuss the airline's flurry of changes to some of its core brand identifiers, such as free checked bags, no premium seats and the infamous open-seating policy. In the interview, Jordan attempted to reframe the airline's changes as less of a strategic pivot and more of a win for its current customers. The message? It's all about 'choice.' The reality? For many customers, it seems to be more about shifting Southwest's identity to entice high-value travelers—frequent fliers and business travelers—and unlocking new revenue with ancillary fees. Here are my top takeaways from the interview: Long-time Southwest customers are used to getting two free checked bags. But Jordan explained that his customers' preferences have changed. What He Said: "Customers today want a lot of choice, especially coming out of the pandemic,' Jordan told the Times. 'The customer's needs and wants are just different. If you don't follow your customers, you look up one day and your products just aren't attractive any longer. The move to bag fees is really about choice." 'If you look on the website today, we have a wider variety of products, including this new basic fare that comes with a lot of restrictions,' Jordan continued. 'For just a few more dollars, you can buy up to the next fare, and it has fewer restrictions.' There are now four fare categories—Basic, Wanna Get Away Plus, Anytime and Business Select—and only Business Select receives free checked bags (2). All the other categories must pay $35 for the first bag, $45 for the second. There are other ways to still get a free checked bag, but they require a commitment to the airline via loyalty programs and credit cards. Rapid Rewards A-List Preferred members receive two free checked bags, while A-List members and Rapid Rewards Credit Cardmembers get one. Analysis: In the interview, Jordan tried to show how bag fees are a good thing for customers, perhaps even something we have wanted all along. For me, it didn't hit home. While the jump between fare categories may be 'just a few more dollars' to Jordan, my own browsing of fares has shown it's a jump of more like $40 or $50 in many cases (feel free to do your own research). And the difference between Basic and Business Select seems to be about $100 to $150, or more in some cases. In this way, when Jordan says that charging for bags is about choice, it feels very contrived. Sure, you could choose to upgrade to Business Select to get two free checked bags (and other perks), but it's not going to save any money. Bottom Line: An attempt by Jordan to spin bad news for customers into good news. No one is celebrating bag fees, even if they like parts of the new fare class model (such as point multipliers or refundability, for example). Upgrading from Basic to Business Select will most likely cost more than paying for your checked bag, which undermines his talking points. Customers may wonder if the decision to charge for bags was actually based on a mix of potential income, industry competition and attracting new business (see below). Jordan Says They Are Not Abandoning Old Clientele To this end, the question was asked: 'A lot of the changes [such as new fare categories, the introduction of premium seats and ending the open-seating policy] reward frequent fliers. But is Southwest de-emphasizing price-sensitive people who don't travel as much?' Southwest Airlines is ending its free checked bag policy as well as open seating. getty What He Said: 'We're not abandoning anybody. You are going to get great fares on Southwest Airlines, period,' Jordan responded. But he went on to admit that the airline was adapting and gunning for new business, perhaps from people who would previously not have flown Southwest. 'You say 'no' to too many things, and when you look up years later, you become irrelevant to a lot of folks,' he added. 'We're just not going to do that.' Analysis: In this response, we get closer to the real reason Southwest is making big changes—to become relevant to other types of travelers, especially frequent fliers who seek premium seats and better loyalty perks. Many people have pointed out that Southwest arguably decided to charge for bags because of the potential revenue it will create. Another potential reason is to free up a perk to offer to cardholders and loyalty members. After all, if everyone gets a free checked bag, what's the point of enrolling in a loyalty program? In 2026, Southwest will introduce premium seats for the first time. While we await the specifics, first class and premium economy choices appear imminent. Southwest is hoping these options will attract frequent fliers—such as business travelers—who value a comfortable ride and loyalty earnings above cost savings. Bottom Line: In his response, Jordan is assuring two things: The continuance of Southwest's low-cost fares (via the Basic fare class) as well as increased options for travelers who prioritize perks over penny counting. We won't know the full extent of it until we see what premium seats are added in 2026, but the biggest question will be: Can Southwest stand on both sides of the fence? Can they continue to appeal to their base of budget travelers while simultaneously attracting new frequent fliers? Jordan Says Termination Of Open-Seating Policy Good For Staff Another long-standing pillar of Southwest's brand is its open-seating policy, but that too will be discontinued beginning in 2026. In the interview, Jordan focused on the impact the policy has on staff. Southwest Airlines CEO Bob Jordan said the timing of the policy changes had nothing to do with public pressure from a major investor. getty What He Said: 'Our employees are excited about the changes. Because if you think about it, if in the open-seating world a family gets on and they can't sit together, the flight attendant is having to police that in the cabin. Our open-seat boarding can cause a lot of pre-boards, and our agents are having to police that. You have people who paid for early boarding, and then we have more pre-boards than anybody else. So folks that paid for earlier boarding are going, 'Well, wait, why?'' Analysis: I like what Jordan said about the pressure the open-seating policy puts on airline staff. No doubt, situations arise that cause headaches, and having assigned seats will do away with all of that stress. Assigned seats will be nice for travelers, too. For the first time ever, passengers will be able to select their seat when booking, which could provide a sense of calm to anxiety-prone passengers and families who might worry about where they will sit under the first-come, first-serve policy. Surely, there will be a cost to selecting seats ahead of time, but those details remain to be seen at this moment. We also have to keep in mind that a big part of the new assigned seating policy will be the creation of premium seats. We don't have details yet, but a first class is coming to Southwest, and probably other upgraded categories as well, such as premium economy. These premium seats will bring in ancillary revenue as well as be provided to qualifying loyalty members, similar to other domestic airlines. For example, on American Airlines, those with airline status can select Main Cabin Extra seats for free, while general passengers can pay for the upgrade. Bottom Line: The introduction of assigned seats on Southwest is a major change that has yet to be fully realized, but it might ultimately change the face of the airline more than anything. How you perceive the new policy will depend on your perspective, but it stands to reason that most frequent fliers will appreciate the change, especially if they obtain status and can access the premium seats as a perk. Jordan Suggests Timing Of Changes And Criticism Was Coincidental Finally, there was an interesting question about how much influence the public pressure put on Jordan by the hedge fund Elliott, one of Southwest's biggest shareholders, had on his decision to implement these changes now. Last year, they called for his removal as well as for changes in Southwest's operations. What He Said: 'I've been asked a lot about Elliott and what went on last summer. We had an investor day on Sept. 26 where we laid out assigned seating, extra leg room and a number of things. All of that strategy was well underway, way ahead of Elliott. So that was not driven by Elliott. They are a large shareholder, but they're one out of many.' Analysis: There should be no surprise that financial investors can impact the future of a corporation's direction. After all, that's the whole point of publicly-traded companies, like it or not. We don't have much public evidence to answer this question one way or another, but reports about Elliot's dissatisfaction were circulating last June, so Jordan's answer doesn't quell much doubt. MORE FROM FORBES Forbes Southwest Airlines Policy Changes: Is More Choice What Customers Want? By Roger Dooley Forbes How Much Will Southwest Airlines Profit Off Charging For Bags? By Will McGough Forbes Investor With Near $2 Billion Stake Puts Southwest Airlines' Free Checked Bag Policy At Risk By Roger Dooley Forbes Delta Airlines Goes After Southwest Airlines Flyers With Status Offer By Roger Dooley Forbes American Airlines Targets Southwest's Most Loyal Customers By Roger Dooley
Forbes
09-07-2025
- Business
- Forbes
Southwest's CEO Says Charging For Bags And Seats Is About ‘Choice' For Current Customers—As A Traveler, I'm Not Buying It
DALLAS, TX - SEPTEMBER 26: Bob Jordan, CEO of Southwest Airlines, speaks to media during Southwest Airlines Investor Day at Southwest Airlines Headquarters on September 26, 2024 in Dallas, Texas. (Photo by Sam Hodde for The Washington Post via Getty Images) The Washington Post via Getty Images Southwest Airlines CEO Bob Jordan recently sat down with the New York Times to discuss the airline's flurry of changes to some of its core brand identifiers, such as free checked bags, no premium seats, and infamous open-seating policy. In the interview, Jordan attempted to reframe the airline's changes as less of a strategic pivot and more of a win for its current customers. The message? It's all about 'choice.' The reality? It seems to be more about shifting Southwest's identity to entice high-value travelers—frequent fliers and business travelers—and unlocking new revenue with ancillary fees. Here are my top takeaways from the interview: Long-time Southwest customers are used to getting two free checked bags. But Jordan explained that his customers' preferences have changed. What He Said: "Customers today want a lot of choice, especially coming out of the pandemic,' Jordan told the Times. 'The customer's needs and wants are just different. If you don't follow your customers, you look up one day and your products just aren't attractive any longer. The move to bag fees is really about choice." 'If you look on the website today, we have a wider variety of products, including this new basic fare that comes with a lot of restrictions,' Jordan continued. 'For just a few more dollars, you can buy up to the next fare, and it has fewer restrictions.' There are now four fare categories—Basic, Wanna Get Away Plus, Anytime, and Business Select—and only Business Select receives free checked bags (2). All the other categories must pay $35 for the first bag, $45 for the second. There are other ways to still get a free checked bag, but they require a commitment to the airline via loyalty programs and credit cards. Rapid Rewards A-List Preferred members receive two free checked bags, while A-List members and Rapid Rewards Credit Cardmembers get one. Analysis: In the interview, Jordan tried to show how bag fees are a good thing for us customers, perhaps even something we have wanted all along. For me, it didn't hit home. While the jump between fare categories may be 'just a few more dollars' to Jordan, my own browsing of fares has shown it's a jump of more like $40 or $50 in many cases (feel free to do your own research). And the difference between Basic and Business Select seems to be about $100 to $150, or more in some cases. In this way, when Jordan says that charging for bags is about choice, it feels very contrived. Sure, you could choose to upgrade to Business Select to get two free checked bags (and other perks), but it's not going to save any money. Bottom Line: A poor attempt by Jordan to spin bad news for customers into good news. No one is celebrating bag fees, even if they like parts of the new fare class model (such as point multipliers or refundability, for example). Upgrading from Basic to Business Select will most likely cost more than paying for your checked bag, which undermines his talking points. More likely, the decision to charge for bags was based on a mix of potential income, industry competition, and attracting new business (see below). Jordan Says They Are Not Abandoning Old Clientele To this end, the question was asked: A lot of the changes [such as new fare categories, the introduction of premium seats, and ending the open-seating policy] reward frequent fliers. But is Southwest de-emphasizing price-sensitive people who don't travel as much? Southwest Airlines is ending its free checked bag policy as well as open seating. getty What He Said: 'We're not abandoning anybody. You are going to get great fares on Southwest Airlines, period,' Jordan responded. But he went on to admit that the airline was adapting and gunning for new business, perhaps from people who would previously not have flown Southwest. 'You say 'no' to too many things, and when you look up years later, you become irrelevant to a lot of folks,' he added. 'We're just not going to do that.' Analysis: In this response, we get closer to the real reason Southwest is making big changes—to become relevant to other types of travelers, especially frequent fliers who seek premium seats and better loyalty perks. Many people have pointed out that Southwest has decided to charge for bags because of the potential revenue it will create. Another reason is to free up a perk to offer to cardholders and loyalty members. After all, if everyone gets a free checked bag, what's the point of enrolling in a loyalty program? In 2026, Southwest will introduce premium seats for the first time. While we await the specifics, first class and premium economy choices appear imminent. Southwest is hoping these options will attract frequent fliers—such as business travelers—who value a comfortable ride and loyalty earnings above cost savings. Bottom Line: In his response, Jordan is assuring two things: The continuance of Southwest's low-cost fares (via the Basic fare class) as well as increased options for travelers who prioritize perks over penny counting. We won't know the full extent of it until we see what premium seats are added in 2026, but the biggest question will be: Can Southwest stand on both sides of the fence? Can they continue to appeal to their base of budget travelers while simultaneously attracting new frequent fliers? Jordan Says Termination of Open-Seating Policy Good for Staff Another long-standing pillar of Southwest's brand is its open-seating policy, but that too will be discontinued beginning in 2026. In the interview, Jordan focused on the impact the policy has on staff. Southwest Airlines CEO Bob Jordan said the timing of the policy changes had nothing to do with public pressure from a major investor. getty What He Said: 'Our employees are excited about the changes. Because if you think about it, if in the open-seating world a family gets on and they can't sit together, the flight attendant is having to police that in the cabin. Our open-seat boarding can cause a lot of pre-boards, and our agents are having to police that. You have people who paid for early boarding, and then we have more pre-boards than anybody else. So folks that paid for earlier boarding are going, 'Well, wait, why?'' Analysis: I like what Jordan said about the pressure the open-seating policy puts on airline staff. No doubt, situations arise that cause headaches, and having assigned seats will do away with all of that stress. Assigned seats will be nice for travelers, too. For the first time ever, passengers will be able to select their seat when booking, which could provide a sense of calm to anxiety-prone passengers and families who might worry about where they will sit under the first-come, first-serve policy. Surely, there will be a cost to selecting seats ahead of time, but those details remain to be seen at this moment. We also have to keep in mind that a big part of the new assigned seating policy will be the creation of premium seats. We don't have details yet, but a first class is coming to Southwest, and probably other upgraded categories as well, such as premium economy. These premium seats will bring in ancillary revenue as well as be provided to qualifying loyalty members, similar to other domestic airlines. For example, on American Airlines, those with airline status can select Main Cabin Extra seats for free, while general passengers can pay for the upgrade. Bottom Line: The introduction of assigned seats on Southwest is a major change that has yet to be fully realized, but it might ultimately change the face of the airline more than anything. How you perceive the new policy will depend on your perspective, but it stands to reason that most frequent fliers will appreciate the change, especially if they obtain status and can access the premium seats as a perk. Jordan Suggests Timing of Changes and Criticism Was Coincidental Finally, there was an interesting question about how much influence the public pressure put on Jordan by the hedge fund Elliott, one of Southwest's biggest shareholders, had on his decision to implement these changes now. Last year, they called for his removal as well as for changes in Southwest's operations. What He Said: 'I've been asked a lot about Elliott and what went on last summer. We had an investor day on Sept. 26 where we laid out assigned seating, extra leg room and a number of things. All of that strategy was well underway, way ahead of Elliott. So that was not driven by Elliott. They are a large shareholder, but they're one out of many.' Analysis: There should be no surprise that financial investors can impact the future of a corporation's direction. After all, that's the whole point of publicly-traded companies, like it or not. We don't have much public evidence to answer this question one way or another, but reports about Elliot's dissatisfaction were circulating last June, so Jordan's answer doesn't quell much doubt.
