Sport Investors League
  • Politics
  • Stocks
  • Investing
  • Business

Sport Investors League

  • Politics
  • Stocks
  • Investing
  • Business
Business

Southwest Airlines will charge to check bags for the first time, launch basic economy tickets

by admin March 12, 2025
March 12, 2025
Southwest Airlines will charge to check bags for the first time, launch basic economy tickets

It’s happening: Southwest Airlines will start charging passengers to check bags for the first time.

It’s a stunning reversal that shows the low-cost pioneer is willing to part with a customer perk executives have said set it apart from rivals in more than half a century of flying in hopes of increasing revenue.

Southwest’s changes come after months of pressure from activist Elliott Investment Management. The firm took a stake in the airline last year and won five board seats as it pushed for quick changes at the company, which held on for decades — until now — to perks such as free checked bags, changeable tickets and open seating.

For tickets purchased on or after May 28, Southwest customers in all but the top tier-fare class will have to pay to check bags, though there will be exceptions. Elite frequent flyers who hold “A-List Preferred” status will still get two bags and A-List level members will get one free checked bag. Southwest credit card holders will also get one free checked bag.

“Two bags fly free” is a registered trademark on Southwest’s website. But its decision to about-face on what executives long cast as a sacrosanct passenger perk brings the largest U.S. domestic carrier in line with its rivals, which together generated $5.5 billion from bag fees last year, according to federal data.

Southwest executives have long said they didn’t plan to charge for bags, telling Wall Street analysts that it was a major reason why customers chose the airline.

“After fare and schedule, bags fly free is cited as the No. 1 issue in terms of why customers choose Southwest,” CEO Bob Jordan said on an earnings call last July.

But Southwest has changed its tune.

“What’s changed is that we’ve come to realize that we need more revenue to cover our costs,” COO Andrew Watterson said in an interview with CNBC about the baggage fee changes. “We think that these changes that we’re announcing today will lead to less of that share shift than would have been the case otherwise.”

In September, Southwest’s then-chief transformation officer, Ryan Green, told analysts that its analysis showed Southwest would lose more money from passengers defecting to rivals if it started charging for bags than it would make from the fees.

“The fact that free bags is a key driver of choice creates the risk that customers may choose the competition if we change the policy,” he said.

Southwest said last month that it had parted ways with Green.

The airline also said Tuesday that it will launch a new, basic economy fare, something rivals have offered for years.

Southwest, in addition, will change the way customers earn Rapid Rewards: Customers will earn more of the frequent flyer miles depending on how much they pay. Redemption rates will vary depending on flight demand, a dynamic pricing model competitors use.

And flight credits for tickets for tickets purchased on or after May 28 will expire one year, or earlier, depending on the type of fare purchased.

It’s the latest in a string of massive strategy changes at Southwest as its performance has fallen behind rivals.

Last July, Southwest shocked passengers when it announced it would ditch its open seating model for assigned seats and add “premium” extra legroom options, ending decades of an single-class cabin.

The airline is also looking to slash its costs. Higher expenses coming out of the pandemic have taken a bite out of airline margins.

Last month, Southwest announced its first mass layoff, cutting about 1,750 jobs roughly 15% of its corporate staff, many of them at its headquarters, a decision CEO Jordan called “unprecedented” in the carrier’s more than 53 years of flying.

“We are at a pivotal moment as we transform Southwest Airlines into a leaner, faster, and more agile organization,” he said last month.

Earlier this year, Southwest announced the retirement of its longtime finance chief, Tammy Romo, who was replaced by Breeze executive Tom Doxey, and its chief administrative officer, Linda Rutherford. Both executives worked at Southwest for more than 30 years.

Southwest has also cut unprofitable routes, summer internships and employee teambuilding events its held for decades.

This post appeared first on NBC NEWS

0
FacebookTwitterGoogle +Pinterest
previous post
My Downside Target for the S&P 500
next post
Tesla shares plunge 15%, steepest drop in five years

Related Posts

Boeing to raise as much as $25 billion...

October 16, 2024

Meta announces end of its DEI programs. Read...

January 11, 2025

Boeing taps aerospace veteran Ortberg to replace Dave...

August 1, 2024

Google employees pressure costumed execs at all-hands meeting...

November 2, 2024

Columbia Sportswear sues Columbia University, alleging trademark infringement

August 5, 2025

Trump’s tariff threats send U.S. companies scrambling for...

November 14, 2024

Disney tops quarterly profit estimates, but starts to...

February 6, 2025

How the New York Mets can justify paying...

December 12, 2024

Global debt has grown to $315 trillion this...

May 30, 2024

New Boeing CEO to give clues about company’s...

October 24, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent

    • Five possible futures for Middle East from renaissance to rockets

      October 20, 2025
    • ‘Untold damage’: Global assisted suicide movement targets children

      October 20, 2025
    • Two IDF soldiers killed amid ‘severe’ ceasefire violation, ‘it’s not the last,’ analyst says

      October 20, 2025
    • Is Trump’s ‘heat’ on Venezuela the start of a wider campaign for regime change?

      October 20, 2025
    • DAN GAINOR: The England we love is lost. If we don’t change, America will be, too

      October 20, 2025

    Categories

    • Business (1,120)
    • Investing (3,290)
    • Politics (4,012)
    • Stocks (1,155)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: sportinvestorsleague.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 sportinvestorsleague.com | All Rights Reserved