Southwest Airlines ends free checked bags, introduces basic economy

In a move that signals a major shift in its long-standing customer-friendly policies, Southwest Airlines has announced that it will begin charging passengers for checked bags for the first time in its history. This change, which takes effect for tickets purchased on or after May 28, marks a significant departure from the airline’s long-standing commitment to offering two free checked bags—a policy that has distinguished it from competitors for over five decades.

Southwest's decision to implement baggage fees follows increasing pressure from activist investor Elliott Investment Management. The firm, which took a stake in the airline last year and secured five board seats, has been advocating for significant changes to boost profitability and improve operational efficiency.

Historically, Southwest executives have emphasized that their free baggage policy was a key factor in customer loyalty. In July 2024, CEO Bob Jordan highlighted that “bags fly free” was the top reason customers chose Southwest, aside from fare prices and flight schedules. However, the airline’s leadership has now acknowledged the necessity of increasing revenue to cover rising operational costs.

“What’s changed is that we’ve come to realize that we need more revenue to cover our costs,” said Southwest COO Andrew Watterson in an interview with CNBC. The decision brings the airline in line with its competitors, which collectively generated $5.5 billion in baggage fees last year, according to federal data.

While the airline’s baggage fee policy will apply to most passengers, some exceptions remain. Travelers with A-List Preferred status will continue to receive two free checked bags, while A-List members and Southwest credit card holders will be entitled to one free checked bag.

In addition to baggage fees, Southwest is introducing a new basic economy fare—a strategy long employed by major U.S. carriers to offer lower base fares while restricting benefits. The airline will also revise its Rapid Rewards program, adjusting the way customers earn frequent flyer miles based on ticket price rather than distance traveled. Redemption rates for these rewards will now fluctuate based on demand, aligning with the dynamic pricing models used by competitors.

Another notable change involves flight credits. For tickets purchased on or after May 28, flight credits will expire within one year or sooner, depending on the fare type—further marking a shift from Southwest’s historically flexible ticketing policies.

These sweeping changes are the latest in a series of strategic shifts at Southwest, which has struggled to keep pace with competitors in recent years. In July 2024, the airline surprised passengers by announcing plans to move away from its open seating model in favor of assigned seating and premium legroom options, breaking from its single-class cabin approach.

Additionally, the airline has been cutting costs aggressively, including its first-ever mass layoff, which affected approximately 1,750 employees—roughly 15% of its corporate workforce. CEO Jordan described the move as “unprecedented” in the airline’s 53-year history but necessary for the company’s financial health.

Southwest has also undergone leadership changes, including the departure of longtime Chief Financial Officer Tammy Romo and Chief Administrative Officer Linda Rutherford. These moves reflect a broader restructuring effort aimed at making the airline more competitive in an evolving industry landscape.

For decades, Southwest prided itself on offering passenger-friendly policies, but its latest decisions indicate a clear shift toward a more revenue-driven strategy. While these changes may help the airline stabilize financially, they also risk alienating loyal customers who have long chosen Southwest for its simplicity and affordability.

As the airline continues to adapt, the question remains: Will these changes help Southwest soar to new heights, or will they drive passengers into the arms of competitors? Only time will tell.