Southwest Airlines is discontinuing its long-standing policy of allowing passengers to check two bags for free, marking a significant shift in its business model. This change, announced in March and effective from Wednesday, requires passengers without certain qualifications—such as being part of the Rapid Rewards loyalty program’s upper tiers or holding the airline’s credit card—to pay for checked bags. The airline aims to generate approximately $1.5 billion annually through these fees, although it anticipates potentially losing $1.8 billion in business from customers who valued the previous free baggage policy.
Rapid Rewards A-List preferred members and those with Business Select tickets will still enjoy two free checked bags, while A-List members and certain select customers will get one. Additionally, passengers with a Rapid Rewards credit card will receive a credit for one checked bag. Southwest plans to introduce a new basic fare for its lowest-priced tickets coinciding with these changes.
Alongside the baggage fee policy, Southwest will enforce new regulations regarding portable chargers due to safety concerns related to lithium-ion battery fires. The airline is also moving away from its traditional open-boarding system, set to adopt assigned seating next year, alongside plans to charge extra for additional legroom and red-eye flights.
Facing pressure from activist investors to improve profitability, Southwest is undergoing significant changes, including a recent announcement of 1,750 job cuts—15% of its corporate workforce—the first layoffs in its 53-year history. The company reached a truce with hedge fund Elliott Investment Management to avoid a proxy battle, resulting in several board changes.
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