United Airlines CEO Scott Kirby said Southwest’s plan to start billing for check bags could be good for other airlines as well as its revenue.
“It’s a sacred cow murder,” Kirby told JP Morgan Investors Conference on Tuesday hours after the Southwest announced the new fee.
He added that he thinks the move is “good for everyone.” It refers to the large US aviation industry where bag fees are standard.
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Dallas-based Southwest will begin charging check bag fees for new bookings starting May 28th. The cost of the new fee has not been disclosed, but most US airlines charge $35 for their initial check bags and more for additional packages. The only travelers exempt from Southwest’s new fees are its finest A-Restrapid Rewards Frequent Flyers, travelers who buy full business, and holders of Co-branded credit cards.
There is none yet as to whether Southwest will add a carry-on fee.
Many of Southwest’s outstanding features have been deprecated or diluted, making them similar to rivals that airlines once claimed to be different, but it remains to be seen whether loyal passengers will stick.
Tsunami of change
Southwest’s new check bag fees are not understated. “Bag Fly Free” has been the center of marketing for nearly 20 years, especially as bag prices checked by competing airlines have become standard. To this day, it remains an important differentiator for airlines.
“We have a very high awareness of our bag fly-free policy,” said Ryan Green, Southwest’s chief transformation officer, in September. “Standing Southwest from its competitors is far apart and one of the biggest criteria for why customers choose Southwest Airlines.”
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After studying the market, Southwest discovered that bag fees “will lead to too many asylum in future flights, even if we are a strong market. Green continued.
That was one of the reasons why Southwest executives said they wouldn’t add bag fees on Investor Day in September, even if they asked for a way to add allocated seats, premium seats and otherwise take more money from customers.
Related: Southwest, which will launch seat allocations for 2026, will partner with international airlines
Southwest CEO Bob Jordan sang a very different song on Tuesday.
“Actual customer booking behavior through the new booking channels did not show that they were getting the same benefits as products bundled with free bags.
Southwest Chief Operating Officer Andrew Watterson added that he is “overdelivering” to travelers who book the cheapest fares for carriers, who are “running away and running away.”
Investor-led initiative
The Southwest changes are driven primarily by investor pressure. After acquiring about 11% stake in the airline last year, activist investor Elliott Investment Management won six seats on the airline’s 13-seat board, successfully pushing for chairman and former CEO Gary Kelly to retire.
Since the board was changed, Southwest has focused on rising profits and rising stock prices. The airline made its first layoff in February, when it cut 15% of corporate workers. At the moment, the bag fees are reaching deep into the traveler’s wallets.
“I think we’re very excited about our future, but the core of who we are and where we stand hasn’t changed,” Jordan said in response to a question about culture. For example, the assigned seating is something employees want, acknowledging that layoffs are “very difficult.”
Elliott raised its Southwest stock to nearly 20% in February.
Changes coming: Southwest Airlines reveals new boarding and seating processes
The future of Southwest
The industry’s question is, “How much will change in Southwest too much?” The airline has an infamous, loyal customer base that loves low fares, frequent flights and a generally quirky staff. Of these flyers, Southwest’s jumping on the ship is essentially an open question, like all competitors.
Kirby said Tuesday that it believes it is likely that a share of travelers from the southwest will occur in “margins.” In other words, the numbers are small.
In his comments on the decision-making behind the new bag fee, Jordan also implies that Southwest is also seeing minimal changes in passenger asylum.
We will know the results soon. The Southwest changes have already begun with new, rapid rewards earlier this month. The repayment rate will change later this month. Bag fees begin in May. Then, in the third quarter, the airline will begin selling allotted seats and its new premium seats. Travelers will have both policies in early 2026.
“It’s a really exciting time at Southwest Airlines,” Jordan said with a hint of sarcasm.
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