Southwest Airlines will charge to check bags for the first time, launch basic economy tickets

IT’s Happening: Southwest airlines will start charging passengers to check bags for the first time.

It’s a stunning reveresal that shows the low-cost pioneer is willing to part with a customer perk executives have said set it apart From rivals in more than half a century of flying in hopes of Increasing Revenue,

Southwest’s Changes come after months of pressure from activist ElliotT Investment ManagementThe firm took a stake in the airline last year and won five board seats as it Pushed for Quick Changes At the company, which help on for decades – until now – to perks like free checked bags, changeable tickets and open seating.

For tickets purchased on or after may 28, Southwest customers in all but the top-tier fare class will have to pay to check bags, thought there will be exceptions. Elite frequent flyers who hold “a-list preferred” Status will get Get two bags and a-list level members will get one free checked bag. Southwest credit card holders will also also get one free checked bag.

“Two bags fly free” is a registered trademark on Southwest’s website. But its decision to about-face on what executives long cast as a sacrosanct passenger perk brings the largest us domestic carrier in line with its rivals, which together generated more than $ 5 bill Fees last year, according to federal data.

Southwest Didn’t Say how much it plans to charge to check bags but it a single bag costs $ 35 to check on delta, american and united.

Southwest Executives Have Long Said They Didn’T Plan to Charge for Bags, Telling Wall Street Analysts that it was a Major Reason who Customers Chose The Airline.

At an investor day in September, southwest said that it would gain between $ 1 billion and $ 1.5 billion from charging for bags but lose $ 1.8 billion of market share. Southwest said its “rigorous research” found that “our ‘Bags fly free’ Policy generates market share gains in excess of potential loss from bag fees,” The Company Said Ins a presentation Tied to Investor Day.

“After fare and schedule, bags fly free is cited as the no. 1 issue in terms of why customers choose southwest,” CEO Bob Jordan Said on An Earnings Call Last July.

But southwest has changed its tune.

“What’s changed is that we’ve come to realize that we need more revenue to cover our costs,” Coo andrew watterson said in an interview with CNBC About the Bagge Fee Changes. “We think that these changes that we’re announcing today will lead to less that share

In September, Southwest’s then Chief Transformation Officer, Ryan Green, Told Analysts that Analysis Showed Southwest Delhi More Money from Money from Passengers Defecting to Rivals If it is Started Charging for bags Than it would make from the feet.

“The fact that free bags is a key driver of choice creates the Risk that customers may choose the competition if we change the policy,” He said.

Southwest said last month that it has Parted Ways With green.

The airline also said tuesday that it will launch a new, basic economy fare, something rivals have offered for years.

Southwest, in addition, will change the way customers earn rapid rewards: customers will earn more of the frequent flyer mills depending on how much they pay. Redemption Rates will vary depending on flight demand, a dynamic pricing model competitors use.

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

It’s the latest in a string of massive strategy changes at southwest as its performance has fallen behind rivals.

Last July, Southwest Shocked Passengers when It Announced it would dits its Open Seating Model For Assigned Seats and Add “Premium” Extra Legroom Options, Ending Decades of an Single-Class Cabin.

The airline is also looking to slash its costs. Higher expenses coming out of the pandemic have taken a bite out of airline margins.

Last month, southwest announced its First mass layoffCutting about 1,750 Jobs Roughly 15% of its corporate staff, many of them at its headquarters, a decision ceo jordan called “unprecedened” in the Carrier’s in the Carrier’s more than 53 years.

“We are at a Pivotal Moment as We Transform Southwest Airlines Into A Lener, Faster, and More Agile Organization,” He said last month.

Earlier this year, southwest announced the retirement of its longtime finance chief, Tammy romoWho was replaced by Breeze Executive Tom Doxeyy, and its Chief Administer Officer, Linda Rutherford. Both Executives Worked at Southwest for more than 30 years.

Southwest has also cut Unprofitable routesSummer Internships and Employee Team-Building Events Its Held for Decades.