- Southwest Airlines has axed virtually everything that once set it apart from competitors.
- The airline announced an end to its famous free checked bags policy on Tuesday.
- The change comes amid other measures to cut costs and increase revenue, like assigning seats.
The final shoe just dropped at Southwest Airlines.
Following intense pressure from an activist investor to shore up revenues and cut costs, Southwest announced on Tuesday that it would end its popular "two bags fly free" policy.
It's a 180-degree shift for Southwest, which found success in a unique business model for nearly 60 years with longtime hallmarks like free open seating, free bags, and a unique corporate culture.
Southwest has since abandoned virtually all of those famous policies and now largely resembles any other airline thanks to assigned seating, basic economy fares, premium seats available for purchase, and bag add-ons.
The changes will likely help boost revenues and, executives say, help Southwest regain its footing as it competes with more airlines than ever in a notoriously competitive industry. It also laid off 15%, or about 1,750, of its corporate staff in February, breaking a decadeslong streak without mass layoffs.
Taken together, all of the changes could spell trouble for Southwest as it aims to keep frequent flyers loyal to the "LUV" brand.
Executives once said the new bag policy was not an option
In July 2024, CEO Bob Jordan said that checked bags were the "No. 1 issue in terms of why customers choose Southwest." The company doubled down on its stance during a September Investor Day.
Former chief transformation officer Ryan Green, who will depart from the company in April, said at the time that Southwest would lose more money from lower demand than it would gain in checked bag revenue.
That's not how things played out.
"In contrast to our previous analysis, actual customer booking behavior through our new booking channels … did not show that we are getting the same benefit from our bundled offering with free bags," Jordan told investors on Tuesday at a conference hosted by JPMorgan.
Starting May 28, only customers with Southwest's credit card or those who hold "A-List" loyalty status will get one free bag.
Top-tier "A-List Preferred" members and customers who book the high-priced Business Select fare will get two free checked bags. It's unclear what the bag fees will look like for everyone else.
A checked bag on American Airlines, Delta Air Lines, and United Air Lines regular domestic tickets starts at $35. Prices vary depending on the bag size and weight.
"We've also benefited from the additional experience of leaders that have direct experience implementing bag fees at multiple airlines, and that's also helped further validate the new assumptions," Jordan said.
Virtually everything is changing at Southwest
The airline also announced basic economy fares that will be offered starting in May. These tickets typically come with strict restrictions on changes or refunds, for example, in exchange for a cheaper price.
According to Southwest, these fares will not be refundable, allow free changes, or offer same-day standby, but they will allow free cancellations.
Southwest is likely trying to better compete with low-cost rivals like Frontier Airlines and Spirit Airlines — both of which are also overhauling their cabins to stoke more demand.
If the price is right, Southwest's new coach fare could also poach customers from American, Delta, and United, which all offer their own versions of basic economy.
Flight credits for most fares will now expire in one year, Southwest said, while basic economy flight credits will expire after six months. These previously never expired.
Other previously announced changes have already taken effect or will also take effect soon:
- Southwest flights are now available to search on sites like Google Flights, Kayak, and Expedia.
- Red-eye flights launched in February, allowing Southwest to better utilize its fleet of planes.
- A partnership with Icelandair now allows Southwest passengers to connect to Europe on a single ticket for the first time.
- Premium seats, including those at the front of the plane and with extra legroom, will launch in 2026. This could help Southwest attract more business and high-paying leisure travelers.
- Assigned seats will launch in 2026. The airline said that 80% of customers surveyed said they preferred assigned seating.
The company's unique boarding system, where most passengers board based on check-in time, remains unchanged — for now. Customers can still pay to upgrade their boarding position.
Southwest also remains one of a shrinking number of airlines to offer a companion pass with some of the most valuable benefits.
