Southwest Airlines has made a surprising shift in its long-standing policies by announcing that it will start charging passengers for checked bags. This marks a major departure from its tradition of offering free checked bags, a policy that has set the airline apart for over 50 years. The decision comes in response to financial pressures and investor demands, particularly from Elliott Investment Management, which has been pushing for changes to boost revenue.
For tickets purchased on or after May 28, most Southwest passengers will have to pay to check their bags, with some exceptions. Elite frequent flyers, such as those with “A-List Preferred” status, will still be able to check two bags for free, while “A-List” members and Southwest credit card holders will get one free checked bag. However, for the majority of customers, the days of Southwest’s “Two Bags Fly Free” policy are coming to an end.
This change aligns Southwest with other major U.S. airlines, which collectively made more than $5 billion in baggage fees last year. Although the airline has not yet disclosed its pricing, competitors like Delta, American, and United currently charge $35 for the first checked bag.
For years, Southwest executives insisted that free checked bags were a key reason customers chose the airline. CEO Bob Jordan previously stated that after fare prices and scheduling, “bags fly free” was the number one reason passengers picked Southwest. The airline even conducted research last September, estimating that baggage fees could generate between $1 billion and $1.5 billion in revenue, but could also result in a market share loss of $1.8 billion. Despite these findings, Southwest has now reversed its stance.
According to COO Andrew Watterson, the airline’s financial situation has forced it to reconsider its approach. “We’ve come to realize that we need more revenue to cover our costs,” he explained in an interview with CNBC.
This is just one of several major changes Southwest has announced. The airline is also introducing a basic economy fare, similar to what other carriers have offered for years. Additionally, Southwest is adjusting its Rapid Rewards program, where passengers will now earn more frequent flyer miles based on how much they spend. The redemption rates for miles will also become dynamic, meaning they will fluctuate based on demand, as seen with other airlines.
Another significant shift involves flight credits. For tickets purchased on or after May 28, flight credits will now expire within one year, or even sooner, depending on the fare type. This policy change reverses Southwest’s previous practice of offering credits with no expiration.
These changes reflect a broader transformation within Southwest as it struggles to keep up with competitors. Last year, the airline shocked customers by announcing it would move away from its traditional open seating model, introducing assigned seats and premium extra-legroom options. This ended decades of offering a single-class cabin, signaling a shift toward a more conventional airline structure.
The company is also working to cut costs amid rising expenses. Last month, Southwest announced its first-ever mass layoff, cutting approximately 1,750 corporate jobs—around 15% of its headquarters staff. CEO Jordan described this as an “unprecedented” move for an airline that has been in operation for more than 53 years.
Leadership changes have also been part of the airline’s transformation. Longtime Chief Financial Officer Tammy Romo recently retired, replaced by former Breeze executive Tom Doxey. Chief Administrative Officer Linda Rutherford, another Southwest veteran, also stepped down after more than 30 years with the company.
In addition to job cuts, Southwest has scaled back unprofitable routes, canceled summer internship programs, and even eliminated long-standing employee team-building events.
These sweeping changes mark a new chapter for Southwest Airlines, as it seeks to balance financial pressures with maintaining customer loyalty. Whether these moves will help the airline stay competitive or alienate long-time passengers remains to be seen.
