SOUTHWEST Airlines CEO has justified a controversial decision to axe a major perk.
Weeks earlier, the Dallas-based carrier has removed its “bags fly free” policy – one of its most beloved passenger benefits.
Southwest Airlines scrapped its free bag policy earlier this year[/caption]
The company CEO Bob Jordan justified the move as accommodating ‘customer needs’[/caption]
The company’s chief executive Bob Jordan said the change accommodates customers’ needs.
He told New York Times: “Customers today want a lot of choice, especially coming out of the pandemic. The customer’s needs and wants are just different.
“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.
“If you look on the website today, we have a wider variety of products, including this new basic fare that comes with a lot of restrictions. For just a few more dollars, you can buy up to the next fare, and it has fewer restrictions.”
NEW CHANGES
Now, travelers with the airline have to pay $45 fees to bring baggage on board after previously allowing two checked bags per passengers for free.
Since the change was introduced in May, customers who aren’t A-list preferred members or flying certain business classes now need to pay $35 for their first checked bag.
Flyers with a second checked bag need to pay an additional $45.
Southwest was also the last airline in the US to maintain an open seating policy which was now scrapped.
The move came after a dispute with Elliott Investment Management, a hedge fund that demanded Mr. Jordan’s termination last year and attacked the airline for following “antiquated business practices from decades ago”.
Passengers have been caught off guard by the sudden shift as Mr Jordan previously said the free bag policy would remain untouched.
The CEO added: “The core of Southwest is still really different. But what you saw is that other airlines went through these changes over a decade or more.
“There is a bit of catch-up here because we’re moving to that world, but in months, not a decade.
“It may feel really fast because there’s a bit of catch-up here, but it’s going really, really well.”
CUSTOMER BACKLASH
Some longtime customers said they no longer see a reason to stick with the airline.
One fuming passenger wrote: “There is officially ZERO reason to fly with you.
“Your fares were expensive, but I got free bags and could pick a good seat free.”
Airline industry analyst Henry Harteveldt, of Atmosphere Research Group, told CBS News: “This is how you destroy a brand. This is how you destroy customer preference.
“This is how you destroy loyalty. And this, I think, is going to send Southwest into a financial tailspin.
“Southwest, with these changes, becomes just another airline.”
‘WE’RE NOT ABANDONING ANYBODY’
However, Mr Jordan reassured customers that the airline will continue to offer great fares.
He said: “We’re not abandoning anybody. You are going to get great fares on Southwest Airlines, period.
“My whole point is there’s more coming to the strategy as we keep evolving, but 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.
“You say “no” to too many things, and when you look up years later, you become irrelevant to a lot of folks.
“We’re just not going to do that.”
Despite the backlash, the airline is expected to generate $4 billion in extra profit from the new fees and restructured fares, as reported by The New York Times.
The airline’s stock has also gone up since the shift.
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.
