Southwest Airlines will charge the bags recorded for the first time

It happens: Southwest Airlines will start loading the passengers to check the bags for the first time.

It is an astonishing reversal which shows that the low-cost pioneer is ready to separate from a perk customer perk said that distinguishing him from competitors for more than half a century of theft in the hope of increasing income.

Southwest changes occur after months of pressure from the activist Elliott Investment Management. The company took a participation in the airline last year and won five seats on the board of directors when it has grown rapid changes to the company, which are held for decades – so far – to advantages such as free square bags, modifiable tickets and open seats.

For tickets purchased on May 28 or after or after, the southwest customers in all, except the high-level rate course, will have to pay to check the bags, although there will be exceptions. Frequent elite leaflets holding the favorite status of list A will always get two bags, and A-List level members will receive a free checkered bag. Holders of Southwest Credit Card will also receive a free checkered bag.

“Two Fly Free bags” is a brand deposited on the Southwest website. But his decision to face what leaders have long set up as a sacro-sacroculty passenger perk brings the largest American national carrier in accordance with its competitors, which together generated more than $ 5 billion from bag costs last year, according to federal data.

Southwest did not say how much he planned to charge to check the bags, but only one bag costs $ 35 to check Delta, American and United.

Southwest’s shares increased by 8% on Tuesday after the announcement of luggage costs and the update of investors, while the other actions of large carriers and the wider market have dropped.

Southwest leaders have long said that they had not planned to charge bags, telling Wall Street analysts that it was a major reason why customers chose the airline.

During a day of investors in September, Southwest said it would earn between 1 billion and $ 1.5 billion in bags bills but would lose $ 1.8 billion in market share. Southwest said that his “rigorous research” has revealed that “our” Fly Free “policy generated from market share of market share to the loss of potential revenue of bag costs”.

Some airline leaders see an opportunity.

“I think, clearly, there are customers who [chose Southwest] Because of this, and now these customers are to be won, ” Delta airlines President Glen Hauenstein said on Tuesday at a conference on investors after the Southwest announcement. “We will see how it takes place during the next period because they continue to implement several modifications to their products.”

United Airlines CEO Scott Kirby, speaking at the same conference, compared the Southwest’s luggage policy for “the murder of a sacred cow” and said that less remunerated customers will be the most affected.

“I consider that it is a big problem because it is more – it seems more financially focused – an airline focused on results than ever before,” he said.

The CEO of Southwest, Bob Jordan, cited the policy of the company’s longtime bags during a call for results last July.

“After the price and the calendar, the fly bags for free are mentioned as number 1 to find out why customers choose the Southwest,” said Jordan.

But Southwest changed its air.

“What has changed is that we realized that we need more income to cover our costs,” said chief of operation Andrew Watterson in an interview with CNBC on luggage costs. “We believe that these changes that we announce today will lead to less of this change in share that this would have been the case differently.”

Jordan said on Tuesday that the new luggage policy will likely help to stimulate registrations for his co-marked credit card and that it was logical because of its commercial scope, listing its tickets via external platforms like Google Flights and Expedia.

“Unlike our previous analysis, real customer booking behavior via our new booking channels such as Metasearch, did not show that we benefit from the same advantage of our grouped offer with free bags, which led us to update the hypotheses,” he said.

Jordan said the carrier has new executives with “direct experience taking into account bag costs in several airlines and this has also helped to further validate new hypotheses”.

Southwest said that the changes he announced on Tuesday will add $ 800 million in profits before interest and tax this year and $ 1.7 billion in 2026, which increased 2026 total increases, including other initiatives, to 4.3 billion dollars, against a target of $ 2.6 billion he shared during his investor day in September.

During these September presentations, Ryan Green, then the Director of Southwest’s transformation, told analysts that an analysis showed that Southwest would lose more money from passengers who make the competitors if he started to invoice bags than he would make it.

“The fact that free bags are a key choice engine creates the risk that customers can choose competition if we change policy,” he said.

Southwest said last month that he separated from Green.

The airline also said on Tuesday that it would launch a new basic economic rate, which rivals have offered for years.

The Southwest, moreover, will change the way customers get rapid rewards: customers will earn more miles from frequent leaflets depending on the amount they pay. The buyout rates will vary depending on the flight demand, a dynamic price model for competitors.

And the flight credits for tickets purchased on May 28 or after expire in one year, or earlier, depending on the type of price purchased.

This is the last of a series of changes in massive strategy in the southwest, because its performance has been late.

Last July, the southwest shocked the passengers when he announced that it would abandon its model of open seats for the attributed seats and added additional legs, ending decades from a single class cabin.

The airline also seeks to reduce its costs. Higher expenses leaving the pandemic took a bite from the airlines.

Last month, Southwest announced its first mass layout, reducing approximately 1,750 jobs approximately 15% of its corporate personnel, many of whom at its head office, a Jordan CEO qualified as “unprecedented” in more than 53 years of flight.

“We are at a pivotal moment when we transform Southwest Airlines into a leaner, faster and more agile organization,” he said last month.

Earlier this year, Southwest announced the retirement of his longtime finance manager, Tammy Romo, who was replaced by the director of Breeze Tom Dorxey, and his administrative director, Linda Rutherford. The two leaders worked at Southwest for over 30 years.

Southwest has also reduced non -profitable roads, summer courses and team consolidation events of employees that take place for decades.