Southwest Airlines, a carrier long celebrated for its customer-friendly policies, has announced a significant shift in its business model that marks the end of an era. As of May 28, 2025, the airline will begin charging customers to check bags, abandoning its iconic "two bags fly free" policy that has distinguished it from competitors for over five decades. This change, coupled with the introduction of basic economy tickets, reflects a broader strategy to boost revenue and align more closely with industry norms, a move that has been under consideration amid mounting financial pressures. The decision, revealed on March 11, 2025, signals a departure from the practices that once defined Southwest as a maverick in the U.S. airline industry.
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For years, Southwest built its brand on perks like free checked baggage, no change fees, and an open seating arrangement, positioning itself as an alternative to the fee-heavy models of major carriers like Delta, United, and American Airlines. The "bags fly free" policy, in particular, became a cornerstone of its identity, allowing passengers to check up to two bags without additional cost—a rarity in an industry where baggage fees have become a multi-billion-dollar revenue stream. In 2023 alone, U.S. airlines collected over $7 billion from such fees, a figure that underscores the financial temptation Southwest has resisted until now. However, the airline’s leadership, under pressure from investors and changing market dynamics, has reevaluated this stance. CEO Bob Jordan, in a statement accompanying the announcement, emphasized the need to adapt to evolving customer expectations and restore profitability, projecting that bag fees could generate up to $1.5 billion annually.
The new baggage policy will not apply uniformly. Customers in the upper tiers of Southwest’s Rapid Rewards loyalty program, such as A-List Preferred members, and those purchasing Business Select fares will continue to enjoy two free checked bags. A-List members and holders of the Southwest credit card will be entitled to one free checked bag, preserving some benefits for loyal patrons. For everyone else, checking luggage will come with a cost, though the airline has yet to disclose specific fees. Industry analysts suggest that Southwest’s charges could mirror competitors, where fees typically start at $35 per bag, but the exact pricing remains a point of speculation until further details emerge. Alongside the baggage fee introduction, Southwest is launching a basic economy fare class, a move that brings it in line with the last of the major U.S. airlines to adopt this tiered pricing model. Set to debut on the same date, May 28, 2025, this "Basic" fare will replace the existing "Wanna Get Away" category, offering lower prices but with increased restrictions. Unlike its predecessor, which included flight credits for cancellations and free same-day standby, the new basic economy tickets will eliminate these flexibilities, aligning with the restrictive frameworks seen on carriers like Spirit and Frontier. This shift is part of a broader overhaul that includes the recent end to open seating—replaced by assigned seats and premium legroom options—and changes to the Rapid Rewards program, where points earned will now scale with ticket price rather than distance flown.
The financial rationale behind these changes is clear. Southwest has faced scrutiny from activist investor Elliott Investment Management, which acquired a significant stake in the company and has pushed for revenue-enhancing measures. The airline’s operating margin, which stood at just 2% in 2024, is targeted to reach 10% by 2027, a goal that hinges on cost-cutting and new income streams like baggage fees. Yet, this pivot carries risks. Southwest previously estimated that while bag fees could bring in $1.5 billion, they might cost $1.8 billion in lost market share as customers drawn to its no-fee policy look elsewhere. Competitors like Delta have already signaled their intent to capitalize on this shift, with Delta President Glen Hauenstein noting that some of Southwest’s customer base may now be "up for grabs." Southwest’s transformation reflects a calculated gamble: trading its unique identity for financial stability in a competitive landscape where low fares and ancillary revenues dominate. For passengers who cherished the airline’s simplicity and generosity, the changes may feel like a betrayal of its founding ethos. For the company, it’s a necessary evolution to secure its future, even if it means becoming more like the rivals it once proudly defied. As the May 28 deadline approaches, travelers booking before that date can still enjoy the old perks, but come late spring, Southwest will fully enter a new chapter—one where bags no longer fly free for all.