Under pressure to boost revenue, Southwest Airlines—the carrier with the tag line "two bags fly free"—will start charging passengers for checked bags in what CNBC reports is "a stunning reversal." It's the first time the low-cost carrier will charge for checked bags in its history. Its executives have long said the free bag policy was a major reason flyers chose the airline. In September, Southwest's then-chief transformation officer, Ryan Green, told analysts the airline would actually lose money if it charged for bags because customers would choose to fly with competitors.
"What's changed is that we've come to realize that we need more revenue to cover our costs," COO Andrew Watterson tells CNBC, which reports Green parted ways with the company last month. Now, most passengers who purchase a ticket on or after May 28 will need to pay to check bags, though there are exceptions, including for passengers who pay the most premium fare. Southwest credit card holders will get one free checked bag, frequent flyers with "A-List" status will get the same, and frequent flyers with "A-List Preferred" status will get two free checked bags, per CNBC.
The shift shows the "growing influence of activist investor Elliott Investment Management," per Reuters. Its nominees hold five of 15 seats on Southwest's board and have criticized leadership for not charging for checked bags. CEO Bob Jordan is now looking to boost Southwest's operating margin from 2% last year to at least 10% in 2027, per the outlet. In other changes, Southwest is launching a new basic economy fare, "something rivals have offered for years," per CNBC, and making changes to Rapid Rewards program. (This comes weeks after the airline laid off 15% of corporate staff.)
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