Southwest Airlines Says Farewell to ‘Bags Fly Free’, Ending the Last Freebie in America

Almost nothing is guaranteed in life. Certainly not weather, electricity, health, tariffs, or eggs. But for more than 50 years, American consumers could count on Southwest Airlines letting them check bags for free.

Dallas-based Southwest is ending the policy in May. Customers are not happy.

“It was the only reason I flew Southwest,” said MaKensey Kaye Alford, a 21-year-old singer and actress who lives near Birmingham, Alabama.

Alford, who is planning to move to New York City later this year, said she would “definitely” consider taking another airline now.

Southwest’s customer-friendly policies have survived recessions, oil price spikes, and even the Covid-19 pandemic, winning it years of goodwill and a loyal following, even as it has grown. No other airline carries more people in the United States than Southwest.

Now, the airline with an unrivaled streak of profitability (it’s almost never posted an annual loss) is under pressure to increase profits as big competitors outpace the airline. So it’s backpedaling off years of banishing the thought that they would charge customers for bags, adding to other business-model tweaks like assigned seating that give it more in common with all other airlines.

Errol Joseph, 36, a sales consultant who lives in New York and Dallas, said he would now consider flying on Delta Air Lines if the price is the same as Southwest because its planes have seatback screens, unlike Southwest. Joseph added that with the baggage policy change, there’s “pretty much no reason to be loyal.”

The bag policy had been around longer than most women were able to get credit cards on their own without a man’s signature. But those days are over. No more freebies, America.

Retailers, restaurants, and airlines are among the businesses that have been pulling back on free perks, from complimentary birthday coffees to free package returns, since the pandemic ended.

Increasingly, airline perks are only available for loyalty program members or customers who buy a more expensive ticket.

Delta offers customers free Wi-Fi on board, but only for those who have signed up for its SkyMiles loyalty program. United Airlines is making a similar move, meanwhile, installing equipment on its planes so customers can soon connect to Elon Musk’s Starlink satellite Wi-Fi for free if they are members of the airline’s MileagePlus program.

It typically takes real financial pressure for companies to return to giveaways, but it’s not unprecedented. Starbucks, for example, got rid of upcharges for dairy alternatives to attract customers to try to reverse a sales slump.

Southwest’s decision pits investors against customers.

Activist hedge fund and, as of last year, big Southwest shareholder Elliott Investment Management has been increasing pressure on the airline to raise its profits as rivals like Delta and United have pulled ahead. Elliott pushed for faster changes at the carrier, which has been long hesitant to change, so it could increase revenue. The firm last year won five board seats in a settlement with Southwest.

In fact, after Southwest unveiled the bag shift and other policy changes, its shares rose close to 9% this week, while Delta, United, and American each fell more than 11%. CEOs of all the carriers raised concerns about weaker-than-expected travel demand, but Southwest bucked the trend, as it expects the changes to add hundreds of millions of dollars to its bottom line.

“Shareholder activism is reshaping LUV into a company that we believe investors will eventually gravitate to,” wrote Seaport Research Partners airline analyst Dan McKenzie in a note Wednesday as he raised his price target on Southwest’s shares to $39 thanks to the policy changes even though the “macro backdrop is glum.”

The decision to ditch the two-free-checked bags is part of the airline’s big profit-seeking makeover in which it is shedding other long-standing offerings like open-seating and single-class cabins for seat assignments and pricier extra legroom options.

It will also start offering a no-frills, no-changes basic economy ticket. Flight credits will also soon have expiration dates. Last month, Southwest had its first-ever mass layoff, cutting about 15% of corporate jobs. It has also slashed unprofitable flying.

Air travel hasn’t stood still over the last half-century, and while it’s held onto many core tenets, neither has Southwest. It has gradually made changes over the years, starting to sell things like early boarding, for example. And with air travel breaking new records, assigned seating is necessary for both customers…