Southwest Airlines, which is known for its “Bags Fly Free” program, has confirmed that it will start charging customers for checked bags from May 28, 2025, in a dramatic departure from the airline’s customer-friendly service philosophy. The move is part of a larger initiative to improve profitability and respond to investor pressure.
For more than half a century, Southwest set itself apart from other airlines by permitting two checked bags for free. Under the new policy, though, A-List Preferred loyalty program members and Business Select fare customers alone will get to keep two bags checked for free. A-List members and Southwest Rapid Rewards credit card members will be able to get one bag checked for free, with all other flyers paying for checked bags. The exact fee structures have not yet been announced.
This policy change is intended to add to Southwest’s bottom line. The airline expects to earn about $1.5 billion each year from baggage charges. However internal estimates indicate a possible loss of $1.8 billion from potential customer losses to the competition, questioning the net financial gain of such a decision.
The move to introduce baggage fees is in line with demands from activist investor Elliott Investment Management, which took an 11% stake in Southwest a year ago. The company has pushed for far-reaching changes to enhance profitability, such as restructuring leadership and revising policies. In response, Southwest has taken a number of steps, such as shifting away from its legacy open seating model to assigned seating in 2026.
The company will also introduce basic economy fare products with further limitations, keeping pace with the industry trend. Moreover, Southwest has introduced cost-reduction steps, including laying off about 1,750 corporate staff, the first in its mass layoffs in history.
Competitors see Southwest’s policy shift as a chance to bring in price-conscious travelers. United Airlines executives called the change a significant industry move, positing it could also advantage other carriers. Likewise, Delta Air Lines officials said travelers who preferred Southwest because of its free baggage policy may now look at other carriers.
Longtime Southwest passengers have been disappointed with the new baggage charges. Most appreciated the airline’s simple pricing and worried that the extra fees will lower the overall travel experience. Some passengers have said they would consider flying other airlines that provide similar services without extra charges.
Southwest’s abandonment of its signature free baggage policy marks a critical juncture in its business strategy. As the company strives to satisfy shareholder demands and increase profitability, it is challenged to maintain customer loyalty during these overhauls. The future effect of these policy changes on Southwest’s market share and bottom line remains to be determined.
