Breaks off to Southwest Airlines’ Bag Fly Free, America’s final prize

There is no guarantee in life. Certainly not the weather, electricity, health, tariffs, eggs. But for over 50 years, American consumers could be counting Southwest Airlines We will let you check your luggage for free.

Dallas-based Southwest will close its policy in May. The customers are not satisfied.

“That was the only reason I flew southwest,” said McCansy Kay Alford, a 21-year-old singer and actress who lives near Birmingham, Alabama.

Alford, who plans to move to New York City later this year, said she would now “definitely” consider taking another airline.

Southwest’s customer-friendly policy has gained years of goodwill and loyal supporters, even if they survived and grew up in the recession, oil prices, and even the Covid-19 pandemic. No other airline in the US has as many people as the Southwest.

Currently, airlines with unparalleled succession in profitability (with few annual losses) are under pressure to make profits by larger competitors outweighing the airline. So it has ousted the idea of ​​charging customers for bags and has retreated over the years, in addition to adjusting other business models like assigned seats, which are common to all other airlines.

Errol Joseph, 36, a sales consultant living in New York and Dallas, said he would consider flying now. Delta Air Lines If the price is the same as the southwest, that plane differs from the southwest, because it has a seatback screen. Joseph added that due to the baggage policy changes, “there are few reasons to remain faithful.”

The bag policy has been around for longer than most women could get their own credit card without a man’s signature. But those days are over. There are no more prizes, America.

Retailers, restaurants and airlines have been one of the businesses that have been pulling back free perks, from free birthday coffee to free package returns since the pandemic ended.

More and more, airline perks are available only to loyalty programs members or customers who purchase more expensive tickets.

Delta offers free Wi-Fi to its customers, but only those who have signed up for Skymiles’ loyalty program. United Airlines Meanwhile, while doing similar moves, customers can quickly connect to Elon Musk’s Starlink Satellite Wi-Fi for free if they are a member of the airline’s MileagePlus program.

Normally, businesses will be subject to real financial pressure to return to their giveaways, but it is not unprecedented. Starbucksfor example, they tried to remove upcharges of dairy alternatives to attract customers and reverse sales slump.

Southwest’s decision pits investors against customers.

Activist hedge funds and rivals like Delta and United have been pushing forward last year, which have put pressure on airlines to make money. Elliott wanted faster changes in his career. Last year, the company won five board meetings in its settlement with Southwest.

In fact, its shares rose to nearly 9% this week after Southwest announced bag shifts and other policy changes, while Delta, United and Americans each fell more than 11%. CEOs of all airlines raised concerns about lower travel demand than expected, but the Southwest has gone down. This is because adding hundreds of millions of dollars to revenue is expected to change.

“Shareholder activity is restructuring Luv into a company that investors believe will ultimately be attracted to,” Seaport Research Airline Analyst Dan McKenzie wrote in a note Wednesday.

The decision to throw away two check bags is part of the airline’s big profit-seeking makeover, ejecting other long-standing products such as open seating and single-class cabins for seat allocations and expensive extra-leg room options.

We will also be offering unadorned, unchanged basic economy tickets. Flight credits will have an expiration date immediately. Last month, Southwest made its first mass layoffs, cutting around 15% of corporate jobs. We also reduced unprofitable flights.

The air travel has not yet been standing for the past half century. And although it is held by many core doctrines, neither is southwest. For example, I started selling things like early boarding, and over the years I’ve been making gradual changes. Also, when air travel breaks new records, both customers need seats assigned to them, and is needed to facilitate the work of employees, Southwest executives argue.

Charging the checked bags was something Southwest leader repeatedly said it would cost more than they could do. (We brought in over $7 billion in baggage fees in 2023.)

In a presentation on Investor’s Day last September, Southwest said it would increase between $1 billion and $1.5 billion from the bag’s bill, but would lose $1.8 billion in market share.

Southwest executives said it had changed.

Hours after breaking news to customers, CEO Bob Jordan told a JPMorgan industry meeting on Tuesday that “in contrast to previous analysis, actual customer booking behavior through new booking channels such as Metasearch does not show that they are benefiting the same amount of benefits as services bundled with free bags.”

Jordan said the carrier has “first-hand experience in implementing bag fees on multiple airlines, which will help further test new assumptions.”

However, thousands have joined consumer Cri de Coeur.

Southwest posted on Instagram on Thursday, two days after the bomb’s announcement, saying he nods to the shocking trade with the Los Angeles Lakers to Dallas Mavericks’ superstar Lukadon Sic’s shocking February trade. As of Friday afternoon, the post also includes information about the changes, and has more than hundreds of responses that your account typically gets.

“Take a screenshot of this as it will be a thumbnail for a Harvard Business Review case study.

Francis Frey, professor of technology and operations management at Harvard Business School, said that in fact, other companies are likely studying as Southwest.

“I hope this isn’t about activist investors coming in and insisting a set of decisions that they have to endure,” she said. “Great organizations build over time. It doesn’t take long to ruin an organization. I really don’t want this to be an example of that.”

The free-free policy for the two checked bags of Southwest officially ends on May 28th, but for now the slogans will still be found on board printed on cocktail napkins.

There are exceptions. Customers who have a Southwest Airlines co-branded credit card can get one bag for free, and customers get one or two free check bags to first-class service (read: Pricier tickets) or to their top tier loyalty program members.

It has not yet been seen whether the customer has abandoned the southwest or simply reacted to the change.

This week, CEOs of Delta, United and Spirit said they are seeing an opportunity to beat customers who could leave the southwest.

However, while many travelers don’t have many other options, they may have to try other airports, there is a huge amount of integration between U.S. carriers and hubs.

Southwest has a share of about 73% at Baltimore/Washington International Thurgood Marshall Airport, over 83% at San Francisco Bay Oakland International Airport and 89% at Long Beach, California.

According to Harvard’s Frei, the actual test is whether bag changes slow down operations in the southwest, with carry-on baggage to avoid baggage where more customers have checked their bags.

“I’m worried that the costs are underestimated,” she said. “Slowing Southwest is a real operational harm.”

Southwest is already preparing employees for an onslaught of customer luggage at the gates.

Shortly after it was announced Tuesday, Southwest told employees in a note that the customer “will definitely continue to carry more luggage than before.”

Gate agents will receive a mobile bag tag printer “reduce the need for string bag tags” and the company will design a new carry-on size guide so customers can see if the package fits as carry-on.

The airline is also planning to speed up the retrofit of the Boeing 737-800 and the largest aircraft with a larger fictional bin.

Frey said that unlike a Costco $1.50 hot dog, not charging a bag is not a loss leader, but rather that companies sell at loss just to attract customers who may buy more expensive and profitable items.

Just as it is loved by its customers, the check bag policy has also helped airlines make their planes turn faster.

“The reason isn’t because it’s a customer-friendly, because it’s a fast turnaround airline,” she said. “Couraging a bag makes it more likely to carry more luggage on board. And carrying more luggage on board will lose the faster turnaround advantage.”

We are confident that Southwest is ready for an increase in gate-checked bags and on-board luggage.

“We have a series of work streams going on in our current business, and we are making sure that this doesn’t affect our turntime,” COO Andrew Watterson said in an interview.

Time tells us how it shakes. For now, there’s a $1.50 Costco Hot Dog.