At Southwest Airlines, checked bags will no longer fly for free
[March 12, 2025] By
MICHELLE CHAPMAN
Southwest Airlines will begin charging customers a fee to check bags,
abandoning a decades-long practice that executives had described last
fall as key to differentiating the budget carrier from its rivals.
Southwest, which built years of advertising campaigns around its policy
of letting passengers check up to two bags for free, said Tuesday that
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.
The airline did not outline the fee schedule but said the new policy
would start with flights booked on May 28.
“We have tremendous opportunity to meet current and future customer
needs, attract new customer segments we don’t compete for today, and
return to the levels of profitability that both we and our shareholders
expect,” CEO Bob Jordan said in a statement.
Less than a year ago, the Dallas-based airline announced it was doing
away with another 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.
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 board.
The airline announced last month 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.
The job cuts, which were scheduled to be mostly completed by the end of
June, are part of a plan to slash costs and transform the company into a
“leaner, faster, and more agile organization,” Jordan said at the time.
Southwest’s stock rose more than 9% Tuesday.
As recently as Southwest's investor day in late September, airline
executives described the bags-fly-free as the most important feature in
setting Southwest apart from rivals. All other leading U.S. airlines
charge for checked luggage, and Wall Street has long argued that
Southwest was leaving money behind.
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.
Southwest said Tuesday that it would 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.
[to top of second column] |
A Southwest Airlines traveler checks a bag at Midway International
Airport, Tuesday, March 11, 2025, in Chicago. (AP Photo/Erin Hooley)
 People who don't qualify for those
categories will get charged to check bags. The airline said that it
also would roll out a new, basic fare on its lowest priced tickets
when the change takes effect.
“I would rather have the free checked bags, that’s for sure," said
customer Dorothy Severson, who was awaiting a flight Tuesday at
Chicago Midway International Airport. "It’s one of the main reasons
I still fly Southwest.”
Southwest is betting that the added bag fees will outweigh the loss
of business from travelers who look closely at the costs on top of
ticket prices. Rivals on Tuesday saw an opening.
“I think clearly there are some customers who chose them because of
that, and now those customers are up for grabs,” said Delta Airlines
President Glen Hauenstein, speaking at the J.P. Morgan Industrials
Conference.
Yet in the current economic environment, keeping travel affordable
may play an outsized roll in staying competitive. The trade war
initiated by President Donald Trump is roiling U.S. markets and
dampening the high-flying optimism prevalent last year among
businesses and households.
To start the week, Delta slashed its quarterly earnings and revenue
expectations, saying that a recent decline in consumer and corporate
confidence over the economy is weakening domestic demand. Shares of
Delta have tumbled 24% this year.
Shares of United have slumped 22%, JetBlue 27% and American Airlines
a whopping 32%.
On Tuesday, Southwest cut its own expectations for the quarter. The
airline now anticipates revenue per available seat mile will rise
between 2% and 4%. That is down sharply from its previous
projections of a 5% to 7% increase. The airline said it expects
capacity to be down about 2%.
The airline announced last year that along with giving passengers
assigned seats, it would charge them extra for with more legroom and
offer red-eye flights.
____
AP Video Journalist Melissa Perez Winder contributed to this report
from Chicago.
All contents © copyright 2025 Associated Press. All rights reserved
 |
