Southwest Airlines, once celebrated for its customer-first approach, will now begin charging passengers to check luggage, marking a dramatic shift in policy. Starting May 28, most Southwest customers will pay bag fees unless they purchase a top-tier fare or qualify for specific exemptions. This decision aligns Southwest with competitors that collectively earned $5.5 billion in baggage fees last year, signaling the airline’s pivot toward boosting revenue and cutting costs.
The move follows intense pressure from Elliott Investment Management, an activist investor group that acquired a stake in Southwest last year. Elliott secured five board seats and pushed for swift changes, resulting in Southwest abandoning its long-standing perks like free checked bags, changeable tickets, and open seating. While “Two bags fly free” has been a trademark slogan for Southwest, the airline's leadership now admits that financial realities demand a new approach.
In addition to baggage charges, Southwest is introducing a basic economy fare, another shift toward industry norms. This new fare will offer fewer benefits than standard tickets, aiming to attract price-sensitive travelers. Furthermore, the airline will adjust its Rapid Rewards program, with points earned based on ticket prices rather than miles flown. Redemption rates will also depend on demand, adopting a dynamic pricing model used by competitors.
Southwest COO Andrew Watterson explained the rationale behind these changes during an interview. He acknowledged, “We need more revenue to cover rising costs.” Despite previously resisting bag fees, Southwest now believes the new policies will minimize customer defections to rival airlines while addressing financial pressures. The airline also faces higher expenses stemming from the pandemic, which have squeezed profit margins in recent years.
This baggage fee decision comes amid broader transformations at Southwest. Last July, the airline stunned loyal passengers by abandoning its open seating policy in favor of assigned seats. It also introduced premium seating with extra legroom, ending its reputation as a single-class carrier. These measures reflect Southwest’s struggle to keep pace with competitors.
To further streamline operations, Southwest has implemented layoffs and cost-cutting measures. Last month, the airline announced its first mass layoff, eliminating approximately 1,750 corporate jobs—about 15% of its headquarters staff. CEO Bob Jordan described the decision as “unprecedented” and necessary to ensure Southwest’s future agility and competitiveness. Internally, the airline has also scaled back unprofitable routes, canceled internships, and reduced team-building events.
Leadership changes have accompanied these strategic shifts. Earlier this year, longtime finance chief Tammy Romo and chief administrative officer Linda Rutherford retired. Both had been with the company for over 30 years. Their replacements are tasked with steering Southwest through this pivotal period.
Southwest’s transformation, however, could risk alienating its core customers. Former executives have warned that charging for bags might drive passengers to rival airlines. Yet current leadership argues that the airline’s survival depends on adopting these changes, highlighting the need for more revenue streams.
As Southwest evolves into a more traditional carrier, loyal customers may wonder if the airline is losing its identity. Will these changes help Southwest regain dominance, or could they alienate its once-dedicated customer base? Share your thoughts in the comments below.
