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Southwest Airlines is set to change its long-standing policy of allowing free checked luggage for its passengers. Beginning on May 28, 2024, only the airline’s top-tier Rapid Rewards A-List Preferred members and those who purchase Business Select tickets will be able to check in two bags at no cost. While A-List Members and holders of certain Southwest-branded credit cards will still be permitted one complimentary checked bag, the rest of the travelers will incur charges for both their first and second checked bags on flights booked from this date onward.
This significant modification marks a departure from Southwest’s 54-year tradition of no baggage fees—a highlight of the airline’s unique selling proposition.
Industry analyst Henry Harteveldt of Atmosphere Research Group expressed strong concerns regarding this decision, remarking, “This could be a critical misstep that damages the brand, undermines customer loyalty, and leads to financial instability.” He believes these adjustments will make Southwest indistinguishable from other airlines in a crowded market.
The CEO of Southwest, Bob Jordan, previously assured customers that the airline would maintain its “bags fly free” policy. Just last September, he emphasized the importance of this feature to travelers, suggesting it was a key factor affecting their choice to fly with Southwest. Yet, he acknowledged that while the policy had no immediate plans for alteration, “never say never” is a prudent outlook in the airline industry, which can evolve based on consumer trends.
As of now, the cost of checked bags has not been officially disclosed, but it is expected to align with what other airlines charge. This strategic shift is under pressure from activist investors who have emphasized the need for Southwest to enhance its financial metrics, particularly following challenges post-pandemic as it competes with evolving consumer demands.
In light of ongoing changes, Southwest has revealed plans for its first layoffs and has introduced red-eye flights. Moreover, it intends to replace its traditional open seating approach with assigned seating and additional cost options for more legroom starting next year. The airline has also revamped its Rapid Rewards program, favoring those booking pricier tickets while scaling back the rewards for budget travelers.
Adding to its changes, Southwest will also introduce a basic economy fare class effective May 28. While this option assures travelers a seat, it will likely come with typical restrictions associated with low-cost offerings from competitors, such as limited carry-on baggage and no advance seat bookings.
In a recent statement, Jordan articulated that these modifications are crucial for restoring profitability and aligning with the changing preferences of consumers in today’s travel landscape, which has seen a decline in demand for short-haul flights and a rise in demand for premium options post-COVID.
Harteveldt commented on the contrasting aspects of the new basic economy fares, suggesting that increased options and lower fares could stimulate competitiveness among airlines, pressuring them to readjust pricing strategies. Southwest is now the last major U.S. airline to roll out a basic economy segment, a move that many carriers adopted to rival ultra-low-cost airlines.
Basic economy offerings often carry limitations such as lack of advanced seat selection, lower boarding priority, and restrictions on carry-on baggage, generally charging extra for checked luggage as well. Previous experiences from other airlines indicate a financial uptick from basic economy products, with United Airlines reporting a revenue increase for similar offerings.
Despite these operational transformations, Southwest claims its dedication to excellent service and hospitality remains unchanged. They stress a commitment to maintaining a robust network and providing significant value to Rapid Rewards members.
Nonetheless, concerns linger about whether these changes resonate with Southwest’s traditional identity. Harteveldt noted, “This is an unprecedented shift for Southwest, and I fear it may have unforeseen financial repercussions.”
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