NEW YORK (CNN) – A few months after abandoning its open seating policy, Southwest Airlines has finished its most recognised perk, the free check baggage.
The airline will begin charging its first and second check bags, starting May 28th, Southwest announced Tuesday. However, members of the A-List Loyalty Program or travelling with business fares are exempt from the fee.
“There is a great opportunity to meet the needs of our current and future customers, attract new customer segments that are not competing today, and return to the level of profitability that both shareholders expect,” Southwest CEO Bob Jordan said in a press release.
This was a change in the southwest earthquake, which has been offering free check bags since airlines launched about 60 years ago, maintaining their policy as competitors began adding and increasing fees. In fact, carriers have trademarked the “Bag Fly Free” slogan, which was an important part of the advertising.
Jordan told investors last year on an analyst’s phone that he had no plans to start charging the first two bags that were being checked. He said the free fee for the first two bags is “a big part of attracting people to the southwest.”
“After fares and schedules, Bag Fly Free is cited as the number one issue in terms of why customers choose the Southwest, so that’s not something that’s under consideration for now,” Jordan said at the time.
He also said there are costs, not only income coming from charging the bag. It takes longer for passengers to find space for overhead bins for carry-on bags, which means it will slower to load the plane. Also, if there are no more rooms available for the overhead bin, you will need to move from the cabin to the cargo hold.
Southwest did not immediately reveal how much the checked bag would cost. Regardless of price, Southwest has 2-3 times the check bags that other airlines have, so it could instantly boost your final line.
The Department of Transportation Statistics Bureau said they did not charge the first two check bags, but in 2023 they collected $73 million in baggage fees and $62 million in baggage fees over the first nine months of 2023. However, this is only a small portion of the baggage fees collected by other airlines, with American Airlines raising $1.4 billion in 2023, United Airlines drawing $1.2 billion and Delta Airlines winning $985 million.
Competitors, including Delta CEO Ed Bastian, said at an investor meeting on Tuesday that the decision to request a Southwest bag could help competitors.
“Obviously, there are customers who chose them for that (bags skip the free policy),” Bastian said. “Now, these customers are clearly getting it.”
Southwest (LUV) stocks skyrocketed more than 9% in pre-market trading.
Changes in the Southwest
Southwest has introduced many changes since Elliott Investment Management acquired $1.9 billion in stake in its career last year. Activist investors called for leadership changes and overhauls operations to increase profitability.
Other features that the Southwest has changed include the cabin. Allocated seats will soon be introduced, with premium seats coming in line with traditional carriers. The airline also deployed Redme flights.
Southwest said customers are seeking these changes. As people switched from Southwest to competitors, the company said the primary reason passengers cite is open seats. However, this change will help the company charge more passengers for tickets.
The airline has also changed the way tickets are sold. Traditionally, it only sold them on southwest.com, but recently they said they would sell them on Expedia to attract more customers.
Southwest also announced on Tuesday that it will begin selling “basic economy” fares in May. This is a low-cost ticket, but there are many restrictions.
Last month, Southwest cut 15% (1,750) of corporate workers. This is the first major layoff in the company’s history. The layoffs will save the company $210 million this year and $300 million in 2026.
The company began the year with new Chief Financial Officer Tom Doxey, who was recently president of Breeze Airways. Former Southwest Chief Financial Officer Tammy Romo and Chief Management Officer Linda Rutherford will retire from their positions in April.
This story has been updated with additional information.
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