Southwest Airlines Ends Free Checked Bags Era, and More
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Bags No Longer Fly Free: Southwest Makes Historic Policy Shift
Southwest Airlines just announced that it will end its iconic 54-year-old "bags fly free" policy, implementing checked baggage fees for most passengers starting May 28, 2025.
The Dallas-based carrier will also introduce a new Basic fare category, marking a significant shift from its traditional customer-friendly approach as it works to boost profitability under pressure from activist investors.
Key Points
- Only A-List Preferred loyalty members and Business Select fare passengers will continue receiving two free checked bags
- A-List members and Southwest credit card holders will get one free checked bag
- This follows Southwest's decision last year to end its open seating policy, including listings on third-party travel sites like Expedia
- CEO Bob Jordan reversed his previous stance from just months ago that "bags will absolutely fly free," citing opportunities to address customer demands and improve profitability
- The airline has faced pressure from activist investor Elliott Investment Management, which secured five board seats after taking a stake in the company
- Southwest aims to increase its operating margin from 2% last year to at least 10% by 2027
What It Means
Southwest is abandoning its long-standing differentiation strategy to align with industry norms, potentially risking customer loyalty in exchange for improved financial performance.
The move could generate an estimated $1.5 billion in additional annual revenue while helping Southwest reach CEO Bob Jordan's target of 10% operating margin by 2027.
However, the airline now faces the challenge of maintaining its identity while competing more directly with major carriers.
