Less than nine months after announcing that it would not end free checked bags, the no-frills carrier did a flip-flop and said it will begin charging for checked bags for flights booked after May 28, 2025.
Southwest Airlines (NYSE:LUV) made the reneged-upon promise in July 2024 when it announced that it is finally going to do away with open seating early in 2026 and will also add "premium seating" with up to five inches of additional legroom.
The airline's CEO Bob Jordan announced the addition of baggage charges in an email to frequent flyers on March 11. A number of financial publications disclosed that the change was being made after ongoing pressure from activist investor Elliott Investment Management. After the announcement was made, Southwest stock price jumped about 9%.
The addition of premium seating (a positive) and charges for checked bags (a negative) will bring Southwest closer to the rest of the nation's airline industry with its dizzying array of ticket prices and nickel-and-dime charges.
Southwest Airlines (NYSE:LUV) made the reneged-upon promise in July 2024 when it announced that it is finally going to do away with open seating early in 2026 and will also add "premium seating" with up to five inches of additional legroom.
The airline's CEO Bob Jordan announced the addition of baggage charges in an email to frequent flyers on March 11. A number of financial publications disclosed that the change was being made after ongoing pressure from activist investor Elliott Investment Management. After the announcement was made, Southwest stock price jumped about 9%.
MY TAKE
The addition of premium seating (a positive) and charges for checked bags (a negative) will bring Southwest closer to the rest of the nation's airline industry with its dizzying array of ticket prices and nickel-and-dime charges.
Southwest said the seating change was an effort to keep existing customers happ(ier) and attract new ones, citing research that showed 80 percent of Southwest customers and 86 percent of potential customers prefer assigned seats.
But free checked bags have been a big draw for Southwest, something the airline has been touting for some time. In a September 26, 2024 news release, Southwest said, “Extensive research reinforces Southwest’s bags fly free policy remains the most important feature by far in setting Southwest apart from other airlines.”
I agree. Now that they're throwing that advantage away, it will be interesting to see if a prediction made in the same news release will come to pass.
“Based on Southwest’s research, the Company believes that any change in the current policy that provides every Customer two free checked bags would drive down demand and far outweigh any revenue gains created by imposing and collecting bag fees,” the release continued. [emphasis added]
We shall see.
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