A Southwest Airlines jetliner departs from Chicago Midway International Airport in Chicago, Illinois, U.S., December 27, 2022. REUTERS/Kamil Krzaczynski/File Photo Purchase Licensing Rights, opens new tab
- Southwest to charge for checked bags starting May 28
- New fees aim to reward loyalty and boost profits
- Baggage fees could add $1.5 billion revenue annually
CHICAGO, March 11 (Reuters) – Southwest Airlines
said on Tuesday it would start charging some customers for checked bags, ending a unique free policy, as the company’s lackluster earnings have fueled pressure to revamp its business model.
The changes mark yet another departure for the Texas-based carrier’s passenger-friendly policies. Last year, Southwest announced plans to end open seating, which had been central to its brand image for more than 50 years.
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Its “bags fly free” policy has been an outlier in the airline industry. Southwest is the only major U.S. carrier that allows customers to check two bags at no cost, a strategy that company executives have said differentiates it from rivals.
But the policy change, which would take effect on May 28, runs the risk of driving away customers. Delta Air Lines
President Glen Hauenstein said on Tuesday some of Southwest’s customers are now up for grabs.
Some analysts also expressed concerns about its impact on the airline’s brand. “We were not supporters of bag fees,” said Savanthi Syth, an analyst at Raymond James.
Southwest had been defending its no-bag fee policy, saying it was the No. 1 reason customers chose it.
Last September, it had warned investors that eliminating the policy would impact its “customer first” brand image. Its analysis showed while charging for bags could bring in $1.5 billion in additional revenue every year, it would cost the airline $1.8 billion in lost market share.
CEO Bob Jordan defended the about-turn on Tuesday, saying Southwest’s new booking data did not show that it was getting the same benefit from its free-bags policy.
Baggage fees produced more than $7 billion in revenue in 2023 for major U.S. airlines, but Southwest generated just $73.4 million, according to the Bureau of Transportation Statis
