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.
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