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Southwest Airlines' plan to start charging for checked bags may not only benefit its bottom line but also other carriers, United Airlines CEO Scott Kirby said.
"It's the slaying of the sacred cow," Kirby said at a J.P. Morgan investor conference on Tuesday, hours after Southwest unveiled the new fees.
He added that he believes the move will be "good for everyone" — referring to the larger U.S. airline industry where bag fees are standard.
Dallas-based Southwest will begin charging checked bag fees on new bookings from May 28. While it did not disclose the cost of the new fees, most U.S. airlines charge $35 for the first checked bag and more for additional luggage. The only travelers exempt from Southwest's new fees are its top-tier A-List Rapid Rewards frequent flyers, travelers who purchase full Business Select fares, and holders of its cobranded credit card.
There is no word yet on whether Southwest will add carry-on bag fees too.
As many of Southwest's standout features are discontinued or diluted — and the airline more closely resembles rivals it once claimed to be different from — it remains to be seen if loyal passengers will stick around.
The magnitude of Southwest's new checked bag fees cannot be understated. The idea that "bags fly free" on Southwest flights has been central to its marketing for nearly two decades, especially as checked bag charges became standard at competing airlines. To this day, it remains a significant differentiator for the airline.
"There's a very high awareness of our bags fly free policy," Ryan Green, chief transformation officer at Southwest, said in September. "It is far and away the top feature that differentiates Southwest from our competitors, and it is one of the top criteria in why customers choose Southwest Airlines. "
After studying the market, Southwest found that bag fees would result in "too much defection in future flying even in markets where we're strong that more than offset the ancillary revenue we'd earn from bag fees," Green continued.
That was among reasons why at its September investor day; Southwest executives said they would not add bag fees even as they adopted assigned seating added premium seats and otherwise sought ways to wring more money out of customers.
Related: Southwest to launch assigned seats in 2026, will partner with international airlines
Southwest CEO Bob Jordan sang a very different tune on Tuesday.
"Actual customer booking behavior through our new booking channels did not show that we were getting same benefit from our bundled offering with free bags which has led us to update assumptions," he said on airline's observations after listing its flights on popular travel search websites including Expedia and Google Flights.
Southwest's chief operating officer Andrew Watterson added that carrier was "over delivering" to travelers who book cheapest fares known as Wanna Get Away.
Southwest's changes are driven primarily by pressure from investors. After taking roughly an 11% stake in airline last year activist investor Elliott Investment Management succeeded gaining six seats on airline's 13-seat board directors pushing retirement chairman former CEO Gary Kelly.
Since board changed focus boosting profits raising share price made first- ever layoffs February cut corporate workforce now reaching deeper into travelers' wallets with fee additions
"I see very much excitement about future core stand changing," Jordan said response question culture adding example assigned seating employees want acknowledging layoffs difficult
Elliott raised stake nearly February
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