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

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).