WASHINGTON — Southwest Airlines announced on Tuesday, March 11, 2025, a significant shift by discontinuing its iconic “Bags Fly Free” policy for most customers, a move timed just before the airline transitions to assigned seating in 2025-2026. This change, effective for flights booked on or after May 28, 2025, marks the end of a 50-plus-year tradition that allowed each passenger to check two bags at no cost, a key differentiator for the budget carrier relied upon by millions of Americans.
Southwest President and CEO Bob Jordan stated that the policy shift targets profitability amid recent struggles, with the airline under pressure from activist investors. While the exact cost per checked bag remains undisclosed, industry standards suggest fees of $35 to $50, aligning Southwest with competitors like United and Delta, which generated over $5.5 billion in baggage fees in 2023.
Exceptions include two free checked bags for Rapid Rewards A-List Preferred Members and Business Select ticket holders, one free bag for A-List Members and select customers, and one credited bag for credit card holders. The airline also introduced a “Basic” fare option and expanded redeye flights, which began in February, as part of its evolving strategy.
This pivot comes despite assurances as recent as September’s investor day, where executives hailed the free bag policy as Southwest’s top competitive edge. The decision reflects Wall Street’s long-standing critique that Southwest was forgoing significant revenue—estimated at $1.5 billion annually if fees were implemented—while other airlines capitalized on such charges. The airline’s financial woes deepened with a $140 million fine for the 2022 holiday meltdown and a recent 15% corporate workforce cut (1,750 jobs), the first layoffs in its 53-year history, announced last month.
Adding to the overhaul, Southwest plans to end its open-seating model, a hallmark since 1967, with assigned seating rolling out in the second half of 2025 and fully implemented by early 2026. This aligns the airline with industry norms, driven by customer preference surveys showing 80% favor assigned seats. The changes follow a truce with hedge fund Elliott Investment Management, which secured board seats after a $1.9 billion stake, pushing for profitability boosts.
Jordan framed the changes optimistically: “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.” Shareholders responded positively, with Southwest’s stock surging 7.3% in premarket trading Tuesday. However, the move risks alienating loyal customers who valued free bags and open seating, potentially driving them to competitors, especially as economic pressures from trade wars and weakened consumer confidence, noted by Delta’s recent earnings cut, challenge the airline industry. The timing—before the busy summer season—may test Southwest’s ability to retain its budget-friendly reputation amidst this transformation.