By MICHELLE CHAPMAN
Southwest Airways mentioned Tuesday that it’s going to start charging clients a charge to examine baggage, abandoning a decades-long follow that executives had described final fall as key to differentiating the price range provider from its rivals.
Southwest, which constructed years of promoting campaigns round its coverage of letting passengers examine two baggage without cost, mentioned the brand new charge will probably be imposed on individuals who haven’t reached the higher tiers of its Speedy Rewards loyalty program, didn’t purchase a business-class ticket or don’t maintain the airline’s bank card.
The airline didn’t define the charge schedule however mentioned the brand new coverage would begin with Could 28 bookings.
“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,” Southwest Airways CEO Bob Jordan mentioned in an announcement.
Lower than a yr in the past, the Dallas-based airline introduced it was removing one other custom, the open-boarding system it has used for greater than 50 years. Southwest expects to start working flights with passengers in assigned seats subsequent yr.
Southwest has struggled just lately and is underneath stress from activist traders to spice up income and income. The airline reached a truce in October with hedge fund Elliott Funding Administration to keep away from a proxy battle, however Elliott gained a number of seats on the Southwest board.
The airline introduced final month that it was eliminating 1,750 jobs, or 15% of its company workforce, within the first main layoffs within the firm’s 53-year historical past.
The job cuts, which had been scheduled to be principally accomplished by the top of June, are a part of a plan to slash prices and remodel the corporate right into a “leaner, faster, and more agile organization,” Jordan mentioned on the time.
Southwest’s inventory rose greater than 7% in morning buying and selling on Tuesday.
As just lately as Southwest’s investor day in late September, airline executives described the bags-fly-free as an important function in setting Southwest other than rivals. All different main U.S. airways cost for checked baggage, and Wall Avenue has lengthy argued that Southwest was leaving cash behind.
The airline estimated in September that charging bag charges would usher in about $1.5 billion a yr however price the airline $1.8 billion in misplaced enterprise from clients who selected to fly Southwest due to its beneficiant baggage allowance.
Southwest mentioned Tuesday that it will proceed to supply two free checked baggage to Speedy Rewards A-Checklist most well-liked members and clients touring on Enterprise Choose fares, and one free checked bag to A-Checklist members and different choose clients. Passengers with Speedy Rewards bank cards will obtain a credit score for one checked bag.
Individuals who don’t qualify for these classes will get charged to examine baggage. The airline mentioned that it additionally would roll out a brand new, primary fare on its lowest priced tickets when the change takes impact.
In a regulatory submitting, Southwest disclosed that it now anticipates first-quarter income per accessible seat mile will probably be up 2% to 4%. Its prior forecast was for a rise of 5% to 7%. The airline mentioned it expects capability to be down about 2%.
Citi’s Stephen Trent nonetheless views Southwest as a inventory that traders ought to promote, saying in an analyst word that it’s not a shock that the airline’s quarterly investor replace seems to be adverse, given “market turmoil around demand concerns, DOGE cuts and tariff uncertainties.”
The airline introduced final yr that together with giving passengers assigned seats, it will cost them additional for with extra legroom and provide red-eye flights.
Initially Printed: March 11, 2025 at 8:17 AM PDT
