Southwest Airlines Ends Free Checked Bags for MOST Flyers—Here's Who Still Qualifies

For years, Southwest Airlines set itself apart by allowing passengers to check two bags for free. However, that perk is coming to an end. The airline has announced a policy change that will affect a significant number of travellers.

Following adjustments to its open seating policy, Southwest Airlines will now discontinue one of its most popular benefits—free checked baggage. The company confirmed on Tuesday that charges for the first and second checked bags will take effect from 28th May.

But will the service be completely gone? Not really.

Exemptions Explained

Members of its A-List loyalty program, those with its Rapid Rewards credit card, and individuals flying on a business fare will not have to pay these fees.

'We have tremendous opportunity to meet current and future customer needs, attract new customer segments we don't compete for today, and return to the levels of profitability that both we and our shareholders expect,' said Bob Jordan, CEO of Southwest, in a press release.

This is a major change for Southwest, an airline that has provided free checked bags for roughly 60 years, even when other airlines began charging and raising their prices. The phrase' bags fly free' is a registered trademark and has been central to their marketing.

Why The Switch? Behind Southwest's Decision

During an analyst call last year, Jordan assured investors the airline wouldn't begin charging for the first two checked bags. He emphasised that the free first and second-checked bags are a big part of what attracts people to Southwest.

'After fare and schedule, bags fly free is cited as the number one issue in terms of why customers choose Southwest. So, it's not something under consideration right now,' Jordan said at the time.

He also pointed out that charging for bags comes with expenses, not just income. It can delay boarding, as passengers spend more time searching for carry-on space. Additionally, some bags must be relocated from the cabin to the cargo area when overhead bins fill up.

Nonetheless, his opinion evolved once Southwest began selling tickets on sites such as Kayak or Google Flights. This showed that buyers were choosing fares based on price, despite Southwest's generous rules. Jordan stated that bringing in new management from airlines that already charge for luggage 'further validates' the change.

'All of these initiatives are new to Southwest, but they are not new to the industry,' Jordan stated during an investor conference on Tuesday. He also mentioned that the updates 'are exactly what our employees want us to do.'

Southwest's Drive For Profitability

Southwest did not immediately disclose the new checked bag fees. Regardless of the cost, this change is expected to quickly increase its profits, as Southwest handles two to three times more checked bags than its competitors.

It's interesting to note that Southwest, while offering free first and second checked bags, still generated £56.46 million ($73 million) in baggage fees during 2023 and £47.95 million ($62 million) in the initial 9 months of 2024, according to Department of Transportation (DOT) figures.

However, this is significantly less than what other major airlines collected. American Airlines, for example, brought in £1.08 billion ($1.4 billion) in 2023, while United Airlines earned £0.93 billion ($1.2 billion) and Delta Air Lines made £761.85 million ($985 million).

'While this could alienate some customers, other major airlines peers have fees today,' Jeff Windau, an analyst at Edward Jones, wrote in a note. 'As long as Southwest maintains competitive pricing, we do not envision a significant loss of customers.'

Industry Reactions: Competitors Weigh In

The announcement drew immediate reactions from competitors. At an investor conference on Tuesday, Delta CEO Ed Bastian indicated that Southwest's decision to introduce baggage fees might work to the advantage of its rivals.

'Clearly there are some customers who chose them because of that (bags fly free policy),' Bastian said. 'Now clearly those customers are up for grabs.'

United CEO Scott Kirby also predicted that other airlines, United included, would likely see an increase in customers due to Southwest's decision, as free bags were a major selling point, particularly for cost-conscious travellers.

'It'll be good for everyone else. It's the slaying of a sacred cow. I view it as a big deal,' he said. According to a CNN report, Southwest (LUV) stock jumped by over 6% in Tuesday's trading. While the new fees will impact many, there are still ways to avoid them.

No-Fee Bags: Credit Card Perks

Achieving elite status within an airline's loyalty program often grants you complimentary checked baggage. However, an airline credit card could be your answer if you want to skip checked bag charges without elite status. Many of these cards include complimentary checked bags as a benefit.

According to NerdWallet, several airline credit cards offer checked bag fee waivers, including Delta SkyMiles Gold American Express Card, United Explorer Card, AAdvantage AviatorRed World Elite Mastercard, JetBlue Plus Card, and Alaska Airlines Visa Signature credit card. These cards can be a valuable way to save money if you frequently check bags.

The era of universally free checked bags on Southwest is changing, but smart planning can help you avoid these new costs. Explore your credit card and loyalty program options to keep your travel budget-friendly.