The end of an era: Southwest’s baggage fee marks a shift in air travel
Pranjal Chandra | Mar 15, 2025, 22:54 IST
Southwest Airlines will start charging for checked bags on May 28, ending its long-standing policy of two free checked bags. This change comes due to competitive pressures and investor demands, aligning with broader industry trends where airlines increasingly charge for perks once considered standard.
For decades, Southwest Airlines stood apart in the U.S. airline industry, not just for its casual approach to customer service, but for a perk that no other major airline offered: two free checked bags. That all changes on May 28, when the Dallas-based carrier will begin charging for checked luggage, marking the end of an era and signaling a broader shift in the airline industry’s approach to customer perks.
A loyalty test for travelers
For many travelers, Southwest’s free checked bag policy was more than a convenience—it was a reason to choose the airline over competitors. “It was the only reason I flew Southwest,” said MaKensey Kaye Alford, a frequent traveler who is now reconsidering her loyalty. The sentiment is echoed by countless customers who valued the airline’s straightforward pricing, particularly in an era when air travel has become increasingly nickel-and-dimed.
Southwest’s policy was a rarity in an industry where baggage fees are now the norm. U.S. airlines collectively raked in over $7 billion in baggage fees in 2023, according to industry reports. But while other airlines padded their bottom lines with such charges, Southwest prided itself on maintaining an old-school, customer-friendly approach. Now, faced with competitive pressures and shareholder demands, the airline is making a calculated move to maximize revenue—even at the risk of alienating longtime customers.
Corporate pressures and the changing landscape
The decision to introduce baggage fees follows mounting pressure from activist investors, particularly Elliott Investment Management, which has pushed Southwest to boost profits. With competitors like Delta and United pulling ahead financially, Southwest is making significant changes beyond baggage fees, including introducing assigned seating and a basic economy fare that eliminates flexibility.
Shareholders are responding positively. Following the announcement of these changes, Southwest’s stock surged nearly 9%, while competitors like Delta and United saw declines. The message is clear: investors see these moves as necessary for Southwest to remain competitive. However, not everyone is convinced the strategy will pay off in the long run.
Frances Frei, a Harvard Business School professor specializing in operations management, cautions that these changes could erode Southwest’s unique brand identity. “Great organizations are built over time, but it doesn’t take long to ruin them,” she said. “I hope this isn’t a case of activist investors pushing for short-term profits at the expense of long-term customer loyalty.”
The ripple effect on the industry
Southwest’s decision to introduce baggage fees is part of a larger trend in which airlines are stripping away perks that once set them apart. Free checked bags, extra legroom, complimentary snacks, and flexible ticketing are increasingly being reserved for passengers who pay premium fares or enroll in loyalty programs.
Other airlines are taking note. Delta and United are investing heavily in loyalty perks, offering free Wi-Fi and other incentives to their most frequent flyers. Meanwhile, budget carriers like Spirit and Frontier have long operated on a pay-for-everything model, proving that customers will endure additional fees if the base fare is low enough.
But for Southwest, the challenge lies in maintaining its reputation for simplicity and transparency while introducing fees that directly contradict its long-standing messaging. The airline’s “Bags Fly Free” slogan has been a core part of its branding, even appearing on in-flight napkins. The removal of this signature perk forces the airline into a delicate balancing act—one that could reshape customer expectations for years to come.
What this means for passengers
In the short term, travelers may have to adjust their packing habits. More passengers are likely to bring carry-ons to avoid checked baggage fees, potentially leading to crowded overhead bins and slower boarding times. In response, Southwest has begun retrofitting its planes with larger overhead storage and deploying gate agents with mobile bag-tag printers to speed up the check-in process.
For cost-conscious travelers, the key takeaway is that air travel is becoming increasingly fragmented. Perks that were once standard are now reserved for those who either pay extra or sign up for credit card partnerships and frequent flyer programs. Travelers who previously relied on Southwest’s no-fee model may now find themselves weighing options between airlines that offer similar pricing but additional perks, such as Delta’s in-flight entertainment or United’s expanding Wi-Fi services.
Southwest has historically been a leader in setting industry trends. Whether this move will help the airline thrive or drive customers to competitors remains to be seen. But one thing is certain: the golden era of airline freebies is officially over.
A loyalty test for travelers
For many travelers, Southwest’s free checked bag policy was more than a convenience—it was a reason to choose the airline over competitors. “It was the only reason I flew Southwest,” said MaKensey Kaye Alford, a frequent traveler who is now reconsidering her loyalty. The sentiment is echoed by countless customers who valued the airline’s straightforward pricing, particularly in an era when air travel has become increasingly nickel-and-dimed.
Southwest’s policy was a rarity in an industry where baggage fees are now the norm. U.S. airlines collectively raked in over $7 billion in baggage fees in 2023, according to industry reports. But while other airlines padded their bottom lines with such charges, Southwest prided itself on maintaining an old-school, customer-friendly approach. Now, faced with competitive pressures and shareholder demands, the airline is making a calculated move to maximize revenue—even at the risk of alienating longtime customers.
Corporate pressures and the changing landscape
The decision to introduce baggage fees follows mounting pressure from activist investors, particularly Elliott Investment Management, which has pushed Southwest to boost profits. With competitors like Delta and United pulling ahead financially, Southwest is making significant changes beyond baggage fees, including introducing assigned seating and a basic economy fare that eliminates flexibility.
Shareholders are responding positively. Following the announcement of these changes, Southwest’s stock surged nearly 9%, while competitors like Delta and United saw declines. The message is clear: investors see these moves as necessary for Southwest to remain competitive. However, not everyone is convinced the strategy will pay off in the long run.
Frances Frei, a Harvard Business School professor specializing in operations management, cautions that these changes could erode Southwest’s unique brand identity. “Great organizations are built over time, but it doesn’t take long to ruin them,” she said. “I hope this isn’t a case of activist investors pushing for short-term profits at the expense of long-term customer loyalty.”
The ripple effect on the industry
Southwest’s decision to introduce baggage fees is part of a larger trend in which airlines are stripping away perks that once set them apart. Free checked bags, extra legroom, complimentary snacks, and flexible ticketing are increasingly being reserved for passengers who pay premium fares or enroll in loyalty programs.
Other airlines are taking note. Delta and United are investing heavily in loyalty perks, offering free Wi-Fi and other incentives to their most frequent flyers. Meanwhile, budget carriers like Spirit and Frontier have long operated on a pay-for-everything model, proving that customers will endure additional fees if the base fare is low enough.
But for Southwest, the challenge lies in maintaining its reputation for simplicity and transparency while introducing fees that directly contradict its long-standing messaging. The airline’s “Bags Fly Free” slogan has been a core part of its branding, even appearing on in-flight napkins. The removal of this signature perk forces the airline into a delicate balancing act—one that could reshape customer expectations for years to come.
What this means for passengers
In the short term, travelers may have to adjust their packing habits. More passengers are likely to bring carry-ons to avoid checked baggage fees, potentially leading to crowded overhead bins and slower boarding times. In response, Southwest has begun retrofitting its planes with larger overhead storage and deploying gate agents with mobile bag-tag printers to speed up the check-in process.
For cost-conscious travelers, the key takeaway is that air travel is becoming increasingly fragmented. Perks that were once standard are now reserved for those who either pay extra or sign up for credit card partnerships and frequent flyer programs. Travelers who previously relied on Southwest’s no-fee model may now find themselves weighing options between airlines that offer similar pricing but additional perks, such as Delta’s in-flight entertainment or United’s expanding Wi-Fi services.
Southwest has historically been a leader in setting industry trends. Whether this move will help the airline thrive or drive customers to competitors remains to be seen. But one thing is certain: the golden era of airline freebies is officially over.