Southwest Airlines boasts that its passengers’ “bags fly free” — but not for long.
Starting May 28 — just in time for the busy summer travel season — only Southwest’s most elite Rapid Rewards A-List Preferred members and passengers who book their top-tier Business Select fares will receive two free checked bags. Frequent flyer A-List Members, Southwest-branded credit card holders and other select customers will be allowed one checked bag.
Everyone else will be charged for their first and second checked bags on flights booked on or after May 28, the carrier says.
“Just another airline”?
It’s a break with Southwest’s 54 year history — one that could undermine customer loyalty to the carrier, according to experts.
“This is how you destroy a brand. This is how you destroy customer preference. This is how you destroy loyalty. And this, I think, is going to send Southwest into a financial tailspin,” airline industry analyst Henry Harteveldt, of Atmosphere Research Group, told CBS News senior transportation correspondent Kris Van Cleave. “Southwest, with these changes, becomes just another airline.”
Just last September, Southwest CEO Bob Jordan told Van Cleave bags would continue to fly without charge.
“Bags will still fly free,” Jordan said. “It’s the third thing customers look for after fare and schedule: Bags fly free, on us. Ninety-seven percent are people who are aware of our policies. So it’s a huge consumer advantage. So bags will absolutely fly free.”
But when pressed if they’d always fly free, he acknowledged, “Well, never say never. … It’s like saying open seating would never change 20 years ago. Consumer preferences change, but from everything that we see, there’s no reason to reconsider this at all, especially right now.”
“When 97% of your customers say they fly you because of your ‘bags fly free’ policy and you make dramatic changes to it, you are telling almost all of your customers, ‘Your business doesn’t matter to us anymore,'” Harteveldt said. “We are watching an airline self-destruct. This is the equivalent of deliberately sailing a ship into an iceberg.”
The cost of a checked bag hasn’t been announced but airline sources say it will be competitive with other carriers.
Mounting financial pressure
The move comes as Southwest, the nation’s fourth-largest airline, has been under intense pressure from an activist investor to improve its financial performance after struggling to keep pace with changing customer preferences post-pandemic.
Southwest recently announced its first ever layoffs, launched its first redeye flights, and intends to end its long-running open seating policy next year. Instead, the airline will offer seat assignments and sell extra legroom seats for an additional fee.
Also announced Tuesday are changes to Southwest’s Rapid Rewards frequent flyer program — increasing the points flyers get for booking higher-priced Business Select fares while reducing the points earned on less expensive “Wanna Get Away” and “Wanna Get Away Plus” fares. The airline will also start dynamic or variable pricing for points redemption across higher- and lower demand flights.
What’s more, starting May 28, Southwest will add a heavily discounted basic economy fare class that will guarantee a flyer a seat on a plane but will likely come with restrictions similar to other carriers’ basic economy offerings.
In a video statement Tuesday morning, Jordan said the changes “will help us return to the levels of profitability we all expect, and to support our collective long term success. It’s also about adapting to what our customers want.
“Many things have changed post-Covid: the loss of short-haul demand, a rise in premium demand, and a change in customer preferences.”
Harteveldt says, “More choice is always a good thing. More low fares are always a good thing. And Southwest is large enough that if they use their basic economy fares in the right way, and I believe they will, they may force other airlines to be more aggressive in their pricing.”
Southwest is the last major U.S. airline to offer a basic economy product, which carriers launched to compete with ultra-low cost airlines like Frontier and Spirit.
While the offerings vary by airline, basic economy tickets often come without an advance seat assignment, tend to be in the last boarding group and may limit the number or size of carry-on luggage. Checked bags and other perks come with a cost. It’s been a hit for airlines. United Airlines reported basic economy revenue jumped 20% last year.
“Southwest Airlines remains committed to its core tenets — amazing people who deliver great hospitality to all Southwest customers, a strong network with the most nonstop flights within the U.S., and a loyalty program that gives real value to Rapid Rewards Members,” the carrier said in a statement.
But is the Southwest that people know?
“Yes,” Harteveldt said. “This change is just so unlike Southwest. And it really is something that I worry could be far more financially damaging to the airline than helpful.”
