Southwest Airlines has officially concluded its long-standing “Two bags fly free” policy, marking a significant shift in its customer service strategy as of May 28. Travelers booking flights will now incur fees of $35 for the first checked bag and $45 for the second. This policy change aligns Southwest’s baggage fees with those of major carriers such as United Airlines and Delta Air Lines, while still remaining competitive compared to budget airlines.
Under the new protocol, passengers purchasing the “Business Select” fares—the highest-priced tickets—retain the privilege of checking two bags at no additional cost. Additionally, “A-List Preferred” loyalty members, who must maintain a minimum of 40 flights annually, will benefit from the same allowance. For all other loyalty members and credit card holders, the airline continues to offer one complimentary checked bag.
The announcement of this policy shift was made by Southwest in March, during which the airline expressed its intent to “deepen and reward loyalty” among its most engaged customers. This represents a notable change from just six months prior, when the airline publicly committed to maintaining its no-baggage-fee policy, citing research that indicated such a change would likely deter customer demand. The iconic slogan “Two bags fly free” was characterized as a crucial differentiator in a competitive market.
However, recent economic pressures have compelled Southwest to reevaluate its operating model. Factors such as rising fuel and labor costs, evolving consumer behavior, and an oversaturation of domestic flights in the post-pandemic era have created challenges for budget airlines seeking to maintain full flights. In response, many carriers, including Southwest, are exploring new revenue avenues, which involves eliminating previously complimentary services. The call for such changes has been echoed by activist investors, particularly Elliott Investment Management, exerting pressure on Southwest to enhance its profitability.
To further streamline operations, Southwest has also announced the termination of its traditional unassigned seating policy. Passengers will now have the option to pay extra to select their seats or gain access to premium offerings such as additional legroom. This move follows a broader trend in the airline industry, where the introduction of tiered services aims to bolster financial viability.
Baggage fees across the U.S. airline industry have proven to be a substantial revenue stream, generating over $7 billion last year alone, as reported by the Bureau of Transportation Statistics. Within this context, Southwest Airlines accounted for approximately $83 million in baggage fees—a fraction of what many of its competitors accrued. For instance, Spirit Airlines reported $774 million, while Frontier Airlines brought in $861 million. The three largest U.S. carriers, including United, Delta, and American Airlines, each surpassed the $1 billion mark in baggage-related revenues.
The rationale for Southwest’s recent changes lies not only in immediate economic pressures but also in a strategic pivot toward loyalty-based marketing. With customer preferences shifting, the airline aims to cultivate a committed base of flyers who appreciate added benefits, even at a cost. As the competitive landscape evolves, these adjustments may help Southwest fortify its financial positioning while still catering to a loyal clientele.
In summary, Southwest Airlines’ decision to eliminate free checked baggage represents a significant transition in its operational strategy amid shifting economic realities. The airline’s efforts to adapt to changing market conditions and consumer preferences underscore the broader challenges faced by the aviation sector as it continues to navigate a post-pandemic environment.