SOUTHWEST passengers hoping the airline would reverse its decision on bag fees appear to out of luck.
The airline’s CEO has doubled down on the controversial change that axed the “bags fly free” policy – and he’s not backing away.
CEO Bob Jordan says the new policy is going well and bringing in more money than expected (stock image)[/caption]
Southwest Airlines has ended its long-running “bags fly free” policy (stock image)[/caption]
The Dallas-based carrier sparked fury in May when it started charging for checked bags, ending a decades-long perk that helped set it apart.
Now, CEO Bob Jordan says the shift is working – and he’s pleased with how it’s going.
“The revenue contribution from bag fees has exceeded our expectations so far,” he said during last week’s Q2 earnings call.
“We’ve experienced no negative impact to the operation.”
Southwest, once known for allowing two free checked bags per passenger, now charges $35 for the first bag and $45 for the second.
Flyers who aren’t A-List Preferred or in select business classes are all affected by the new charges.
It’s not just baggage. Southwest also ended its open seating policy this year – another signature feature passengers loved.
The changes came shortly after pressure from activist hedge fund Elliott Investment Management, which demanded Jordan’s removal and blasted the airline’s “antiquated” model.
Despite the backlash, Jordan defended the decision, saying the shift gives travelers more “choice.”
“Customers today want a lot of choice, especially coming out of the pandemic,” he told The New York Times.
“If you don’t follow your customers, you look up one day and your products just aren’t attractive any longer. The move to bag fees is really about choice.”
He added that passengers now have a range of fare options on the website – including a restrictive basic tier that requires users to pay more for perks.
Southwest was the last major US airline offering free checked bags before the shift.
Now, the company expects to bring in an additional $4 billion in profit from new fees and updated fares, The Times reported.
Southwest’s recent changes
- Baggage fees introduced – For the first time in over 50 years, Southwest will start charging passengers for checked bags. This applies to tickets purchased on or after May 28, except for top-tier fare classes, certain credit card holders, and elite frequent flyers.
- New economy fare – Southwest will launch a basic economy fare, similar to competitors, offering lower-priced tickets with fewer perks.
- Rapid Rewards changes – Frequent flyer miles will now be based on how much customers spend, rather than the number of flights taken. Flight redemption rates will also shift to a dynamic pricing model, meaning they’ll cost more during peak times.
- Flight credit expiry – Flight credits for tickets purchased after May 28 will expire after one year, or sooner, depending on the ticket type.
- Layoffs and cost cuts – Southwest recently announced its first mass layoffs, cutting 1,750 corporate jobs, about 15% of its headquarters staff, to reduce costs.
- End of open seating – In July 2024, Southwest announced plans to ditch its open seating policy, a core part of its brand for over 50 years, and move to assigned seating with premium options for extra legroom.
- Executive shakeups – The airline parted ways with its chief transformation officer Ryan Green, who warned against baggage fees. It also replaced its long-time finance chief and chief administrative officer earlier this year.
- Route and program cuts – Southwest has cut unprofitable routes, summer internships, and employee team-building events, long-standing traditions the airline held for decades.
Even with Jordan’s upbeat tone, Southwest’s recent earnings report wasn’t strong – and experts aren’t convinced.
A spike in carry-on luggage has reportedly caused major headaches for staff and strained aircraft storage.
Some longtime passengers said they feel misled, especially since Jordan previously pledged the free-bag policy would stay.
“There is officially ZERO reason to fly with you,” one traveler fumed. “Your fares were expensive, but I got free bags and could pick a good seat free.”
Industry analyst Henry Harteveldt didn’t hold back in an interview with CBS News.
“This is how you destroy a brand. This is how you destroy customer preference,” he said.
“This is how you destroy loyalty. And this, I think, is going to send Southwest into a financial tailspin.”
Still, Jordan insisted the company isn’t losing sight of its roots.
“You are going to get great fares on Southwest Airlines, period,” he said.
He added: “We’re not abandoning anybody… it’s all about staying true to who we are – best people, best hospitality, best service – while stretching the model to meet the needs of our customers.”
Stock prices have risen since the policy changes, giving the airline a temporary boost despite the storm.
