Southwest Airlines chairman steps down amid speculation over new fees

Basic economy would entail several key features:

- No advance seat assignments: Basic economy customers would receive a seat assigned at check-in.

- No more free checked bags: Basic economy fares might eliminate free checked bags entirely, charging even for the first bag.

- Boarding last: While boarding order may not affect seat choice due to assigned seating, those boarding last could face limited overhead bin space if carry-on restrictions are imposed.

- No full-sized carry-on: Basic economy passengers might be restricted from bringing standard-sized carry-on bags onboard, increasing the likelihood of paid checked bags.

These changes could lead to further adjustments in baggage policies across other fare classes. The plan might also be influenced by the Department of Transportation’s fee disclosure rule, currently enjoined by a federal district court. If enforced, this rule would require upfront display of bag fees with airfares, potentially making Southwest's ticket prices appear more competitive.

The DOT rule could reduce the impetus for stripping benefits from fares. However, it is not solely about encouraging pricier ticket purchases or additional fees but also about tax benefits from shifting part of the ticket cost into fees—saving 7.5% federal excise tax on domestic airfare and potentially worth $50-$100 million annually in tax savings for Southwest.