Southwest Airlines will charge passengers to check bags for the first time in its over half-century of flying, citing a need for more revenue to cover costs. The move comes after months of pressure from activist Elliott Investment Management, which has pushed for changes to the company’s business model.
Starting May 28, customers in most fare classes will be charged $35 per bag to check in luggage. Elite frequent flyers and Southwest credit card holders will still receive free checked bags. The airline expects to generate $800 million in earnings before interest and taxes this year from the new policy, with a total increase of $1.7 billion by 2026.
Southwest is also launching basic economy tickets, which have been offered by rivals for years. Passengers can earn more frequent flyer miles depending on how much they pay, with redemption rates varying based on flight demand. Flight credits will expire in one year or earlier, depending on the type of fare purchased.
The airline’s changes come as it looks to slash costs and become a leaner organization. Southwest has cut 1,750 jobs, reduced unprofitable routes, and canceled employee team-building events. The moves are part of its strategy to improve profitability and stay competitive in the market.
Southwest shares rose 8% following the announcement, while other major carriers’ shares fell. Delta Air Lines President Glen Hauenstein said Southwest’s decision could lead to a shift in customer behavior, with some customers choosing rival airlines over the budget carrier.
Source: https://www.cnbc.com/2025/03/11/southwest-airlines-charge-checked-bags.html