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Southwest Airlines faces passenger backlash over new baggage policies

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Southwest Airlines faces passenger backlash over new baggage policies
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Southwest Airlines | Wikipedia

Southwest Airlines has undergone significant changes in recent months, altering its long-standing focus on providing a comfortable passenger experience. Historically known for differentiating itself through better treatment of passengers, the airline faced financial struggles and an operational meltdown during the 2022 holiday season, prompting a shift in strategy.

Elliott Management, a global activist investment management firm, played a pivotal role by acquiring shares and pressuring Southwest to change. The firm argued that the airline needed to evolve beyond its traditional strategy. Elliott's influence led to significant leadership changes, including the appointment of Rakesh Gangwal as board chairman.

Southwest's major adjustments include modifying its fare structure. Starting May 28th, the airline eliminated its policy of offering two free checked bags to all passengers. Now, only A-List members and Business Select ticket holders retain this benefit. Other passengers face fees for checked bags, which could deter those seeking low-cost travel options.

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The airline also introduced a restrictive basic fare class with non-changeable tickets and implemented a variable award pricing system for its Rapid Rewards program. Flight credits now have expiration dates: twelve months for standard class fares and six months for basic class tickets.

These changes have left passengers uncertain about Southwest's value proposition. Initial confusion over baggage fees was clarified when Reuters reported charges of $35 for the first checked bag and $45 for the second—lower than many competitors' fees.

Despite customer dissatisfaction, Southwest aims to increase revenue from checked bag fees and enhance its loyalty program's appeal. The introduction of these changes is seen as necessary to maintain operations in underserved markets and fend off competition from legacy airlines.

"At the end of the day," said one observer, "Southwest Airlines passengers are undoubtedly worse off as a result of these changes." While elite members may find increased value in loyalty programs, others may reconsider flying with Southwest due to new costs associated with checked luggage.

Financial analysts suggest that while these moves risk alienating customers, they could be crucial for sustaining Southwest's business model amid competitive pressures and thin profit margins in certain markets.

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