Southwest Airlines Ends Free Checked Bags, Introduces New Fees and Boarding Changes
Southwest Airlines is ending its long-standing policy of allowing passengers to check up to two bags for free, introducing fees of $35 for the first checked bag and $45 for the second bag for most customers. This shift takes effect for flights booked starting Wednesday, marking a significant change from the airline's previous approach, which was a key differentiator in the budget airline market. The new baggage fee policy excludes passengers who have reached higher tiers in the Rapid Rewards loyalty program, those with business class tickets, and holders of Southwest's branded credit cards, who continue to receive baggage check benefits.
The airline also plans to introduce a new basic fare on its lowest priced tickets alongside the baggage fees. Southwest anticipated that while the fees could generate about $1.5 billion annually, they might also result in approximately $1.8 billion in lost business from customers who valued the free baggage allowance. This change reflects a broader strategy by Southwest as it responds to ongoing financial pressures and shifts in customer expectations.
In addition to baggage fee changes, Southwest is implementing a safety-related policy requiring passengers to keep portable chargers visible during use to mitigate risks associated with lithium-ion battery fires. The airline is also moving away from its open boarding system, which it has used for over 50 years, adopting assigned seating starting next year. Other recent initiatives include charging extra for additional legroom and the introduction of red-eye flights.
Southwest Airlines has undergone significant structural changes recently, including announcing layoffs of 1,750 corporate staff, representing 15% of its corporate workforce, in the first major workforce reduction in its history. The company is also under pressure from activist investors to improve profitability and revenue growth, leading to governance changes after a truce with Elliott Investment Management, which acquired several board seats.
The airline's stock responded positively to the news, rising 3% alongside broader gains in the airline sector. These developments highlight Southwest's strategic pivot as it aligns its legacy cost structures and service offerings with current market demands and operational realities.