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Southwest ends 'bags fly free' policy; introduces new checked bag fees

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Southwest ends 'bags fly free' policy; introduces new checked bag fees
Policy
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Robert E Jordan CEO of Southwest Airlines | Southwest Airlines

Southwest Airlines has announced a new baggage fee policy, marking the end of its "bags fly free" policy. Starting May 28, passengers will be charged $35 for the first checked bag and $45 for the second on all tickets booked from this date. This decision comes amid pressure from investors to improve financial performance.

The change applies only to future bookings, with exceptions for certain fare classes and loyalty tiers. Travelers in Business Select class and those with Rapid Rewards A-List Preferred status will still receive two complimentary checked bags. A-List members and Rapid Reward credit card holders are eligible for one free checked bag. Hawaii residents traveling between islands can continue to check two bags for free.

CEO Bob Jordan explained that this move is part of several initiatives aimed at supporting business objectives and creating more choices for passengers. He stated, “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."

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This policy aligns Southwest with other major US carriers like Delta Air Lines, American Airlines, and United Airlines, which charge similar fees for checked baggage. The airline hopes the change will boost revenue significantly.

Pressure from activist investors such as Elliott Investment Management has led Southwest to implement structural changes beyond baggage fees. These include laying off 1,750 corporate roles, introducing assigned seating instead of open boarding, offering new fare bundles with extra legroom options, launching a basic economy product, and selling tickets through third-party platforms.

Last year’s projections estimated that the new baggage policy could generate approximately $1.5 billion in annual revenue but acknowledged potential losses of up to $1.8 billion from loyal customers who preferred the previous policy.

In 2024 alone, US passenger airlines generated over $7 billion in baggage fee revenue according to Bureau of Transportation Statistics data. Despite not charging for initial bags previously, Southwest collected $83 million in fees last year through charges on additional luggage.

Analysts anticipate an increase in these figures as Southwest processes more checked luggage per passenger compared to its competitors like American Airlines ($1.5 billion), United Airlines ($1.3 billion), and Delta Air Lines (just over $1 billion).

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