Southwest Airlines has revealed a groundbreaking shift in its baggage policy, signaling the end of an era for both the airline and its passengers. Starting May 28, 2025, the airline will begin charging for checked bags, thereby removing one of its most distinguishing features in the budget airline market. For years, Southwest stood out with its "Two bags fly free" slogan, allowing travelers to check up to two bags without any additional charge. This hallmark practice is now coming to a close.
"We see a great opportunity to meet the current and future needs of our customers, attract new customer segments we currently don't compete for, and return to the profitability levels both we and our shareholders expect," stated Bob Jordan, CEO of Southwest, in an official company announcement.
Details on the Revised Baggage Policy
Southwest has clarified that passengers who are not in the upper tiers of its Rapid Rewards A-List Preferred loyalty program, do not purchase Business Select tickets, or do not hold the airline’s credit card, will be required to pay for checked bags. However, the airline has yet to disclose the specific fees that will apply.
The company has outlined that free baggage benefits will continue for certain groups:
- ‘Rapid Rewards A-List Preferred’ members and Business Select fare passengers can check up to two bags at no additional cost.
- ‘A-List’ members and select customers will receive one complimentary checked bag.
- ‘Rapid Rewards’ credit card holders will obtain a credit to cover the cost of one checked bag.
For other travelers, Southwest plans to introduce a more economical basic fare, which will include options such as seat selection and increased legroom.
Financial Motivations and Impacts of the Change
This policy change comes amidst financial pressures on Southwest Airlines. In recent months, the airline has faced economic challenges and investor pressure to boost profitability. In October, Southwest reached an agreement with Elliott Investment Management, leading to the addition of several of Elliott’s members to the board of directors.
Last month, the airline announced the layoff of 1,750 employees, representing 15% of its workforce, marking the first significant staff reduction in its 53-year history. The company justified this as a cost-cutting measure to transform into a "more agile, fast, and efficient organization." Implementing baggage fees is a key strategy in this restructuring process.
In 2023, Southwest generated only $73 million from baggage fees, significantly less than its major competitors. United Airlines brought in $1 billion, Delta $788 million, Spirit $650 million, and JetBlue $480 million during the same period, according to U.S. media reports. Wall Street has noted that Southwest was missing out on substantial revenue by maintaining its free baggage policy. Last year, the airline estimated that charging for baggage could yield approximately $1.5 billion annually. However, they also projected a potential loss of up to $1.8 billion due to customer attrition, as many chose Southwest specifically for its free baggage policy.
Following the announcement, Southwest's stock surged by more than 9% on Tuesday, indicating investors view this move as a positive step toward improving the company's profitability.
Additional Changes at Southwest Airlines
The introduction of baggage fees is not the only transformation at Southwest. The airline is also implementing other measures aimed at enhancing its competitiveness:
- Introduction of Basic fares, offering cheaper tickets with seat selection and more legroom.
- Ticket sales through platforms like Expedia.
- Introduction of redeye flights.
- Plans for seat assignments, moving away from its traditional open boarding system.
Less than a year ago, the airline also announced the elimination of its open boarding system, a model it had used for over five decades. Flights with assigned seating are expected to begin in 2026.
Customer Reactions and Southwest’s Future
The announcement has prompted mixed reactions among the airline's customers. While some frequent flyers will continue to enjoy certain perks, many regular Southwest travelers view the baggage fees as a significant loss of value. "Southwest was the only airline where I didn’t have to worry about paying extra for my luggage. Now it's just like the others," commented one customer on social media.
Southwest’s transition to a more traditional airline model, with baggage fees and assigned seating, could alter travelers' perceptions of the company. However, it will also enable more aggressive competition with airlines like United, Delta, and American Airlines in the battle for additional revenue.
With these changes, Southwest enters a new era where profitability and adaptation to market trends seem to take precedence over its traditional customer-centric approach.
FAQs About Southwest Airlines' New Baggage Policy
When will Southwest Airlines start charging for checked bags?
Southwest Airlines will begin charging for checked bags starting May 28, 2025.
Who will still receive free checked baggage with Southwest?
Free checked baggage benefits will continue for ‘Rapid Rewards A-List Preferred’ members, Business Select fare passengers, ‘A-List’ members, select customers, and ‘Rapid Rewards’ credit card holders.
Why is Southwest Airlines changing its baggage policy?
The change in baggage policy is part of a strategy to enhance profitability amidst financial pressures and to meet investor demands for increased revenue.