Southwest Airlines is making a dramatic change to one of its most recognizable policies—free checked bags. The airline announced that starting May 28, passengers will need to pay for their first and second checked bags, a significant departure from a long-standing tradition that set Southwest apart from its competitors.
However, not all travelers will be affected. Members of Southwest’s A-List loyalty program, holders of the airline’s branded credit card, and passengers with business fare tickets will continue to enjoy free checked baggage.
A Shift in Strategy
Southwest’s CEO, Bob Jordan, framed the decision as a necessary move to stay competitive and profitable. “We have tremendous opportunity to meet current and future customer needs, attract new customer segments we don’t compete for today, and return to the levels of profitability that both we and our shareholders expect,” Jordan said in a press release.
For nearly 60 years, Southwest has maintained its free checked baggage policy, even as rivals implemented fees. The airline even trademarked the slogan “Bags Fly Free,” which has been a core part of its marketing strategy. However, recent developments, including Southwest’s expansion into third-party booking platforms such as Google Flights and Kayak, have revealed that customers prioritize price over baggage policies when choosing flights.
Southwest had previously insisted it had no plans to charge for checked bags. In an investor call last year, Jordan emphasized that the policy was one of the main reasons customers chose Southwest over other airlines. He also noted that charging for checked baggage could slow boarding times, as passengers might try to cram more luggage into overhead bins.
Financial and Competitive Implications
Despite its free baggage policy, Southwest still generated $73 million in baggage fees in 2023 and $62 million in the first nine months of 2024. However, these figures pale in comparison to its competitors. American Airlines collected $1.4 billion in baggage fees in 2023, while United Airlines and Delta Air Lines earned $1.2 billion and $985 million, respectively.
Although some customers may react negatively to the change, analysts believe it won’t significantly impact Southwest’s customer base as long as the airline maintains competitive pricing. Jeff Windau, an analyst at Edward Jones, noted that “other major airlines already have these fees. As long as Southwest keeps fares attractive, we don’t foresee a major customer loss.”
Competitors, however, see Southwest’s move as an opportunity. Delta CEO Ed Bastian said that some customers who previously chose Southwest for its free checked bags might now reconsider their options, benefiting rival airlines. United’s CEO Scott Kirby echoed this sentiment, calling it “the slaying of a sacred cow” and predicting gains for other airlines.
Broader Changes at Southwest
The baggage policy change is just one of several strategic shifts at Southwest, driven in part by activist investor Elliott Investment Management, which acquired a $1.9 billion stake in the airline last year. The investment firm has pushed for leadership changes and operational reforms to improve profitability.
Southwest has already announced several major adjustments, including the introduction of assigned seating, premium seats, and red-eye flights—bringing the airline more in line with traditional carriers. The company has also expanded its ticket sales to platforms like Expedia in an effort to attract more customers.
Another notable change is the introduction of basic economy fares starting in May. These low-cost tickets will come with numerous restrictions, mirroring offerings from competitors like American, Delta, and United.
In addition, Southwest recently undertook its first-ever mass layoffs, cutting 15% of its corporate workforce, or approximately 1,750 jobs. This move is expected to save the company $210 million this year and $300 million in 2026.
The Road Ahead
With these sweeping changes, Southwest is charting a new course—one that aligns more closely with industry norms. While the end of free checked bags marks the conclusion of an era, it reflects the airline’s evolving strategy in an increasingly competitive market. How customers will ultimately respond remains to be seen, but for now, Southwest is betting that its low fares and evolving business model will keep travelers on board.
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