Travel
Southwest Airlines Ends Era of Free Checked Bags, Introduces Basic Economy
By Jake Beardslee · March 12, 2025
Southwest Airlines Abandons Free Checked Bag Policy After Decades
In a significant departure from its long-standing business model, Southwest Airlines announced Tuesday it will begin charging passengers for checked luggage and introduce basic economy tickets that restrict free changes, ending decades of customer-friendly policies that set the carrier apart from competitors. Mark Henle/The Republic / USA TODAY NETWORK via Imagn Images
Operational Changes Expected as Airline Prepares for New Check-in Procedures
Southwest CEO Bob Jordan made the announcement as part of a broader strategy shift that includes moves toward assigned seating and premium legroom options, abandoning the airline's traditional open seating approach."With an additional step for Customers to pay for bags at the ticket counter or kiosks, we have to plan for longer transaction and queue times, even if fewer Customers are checking their bags altogether," Southwest executives Justin Jones and Adam Decaire wrote in a staff memo obtained by CNBC. Maryland GovPics / Wikimedia
Activist Investor Pressure Drives Business Model Shift
The changes come after significant pressure from activist hedge fund Elliott Investment Management, which took a stake in the airline last year and pushed for business model adjustments to improve returns and revenue. Elliott Management Corporation / Wikimedia
New Tiered Baggage Policy Takes Effect May 28
Starting May 28, only passengers with Business Select tickets or top-tier A-List Preferred frequent flyer status will receive two free checked bags. A-List members and Southwest credit cardholders will get one free checked bag.While Southwest hasn't disclosed specific fee amounts, competitors typically charge around $35 per checked bag. All tickets, including the new basic economy option, will still include a free carry-on bag. izhar-ahamed / Pixabay
Airline Prepares for Surge in Carry-on Luggage
The airline acknowledged the likelihood of increased carry-on luggage and is taking steps to address potential issues, including equipping gate agents with mobile bag-tag printers, designing new carry-on size guides, and accelerating the installation of larger overhead bins on its Boeing 737-800s and Max aircraft. Acroterion
Financial Calculations Behind the Policy Change
Southwest had previously estimated that charging for bags could generate up to $1.5 billion but might cost $1.8 billion in lost market share. The airline's leadership now believes these changes will drive Southwest credit card sign-ups and benefit from new sales channels like Expedia. ClickerHappy / Pixabay