Goodbye to 'bags fly free' on Southwest, the last airline freebie in America

Core Insights - Southwest Airlines is ending its long-standing policy of allowing customers to check bags for free, effective May 28, 2025, which has led to customer dissatisfaction [1][4][20] Company Strategy - The decision to charge for checked bags is part of Southwest's strategy to increase profitability amid pressure from investors and competition from larger airlines like Delta and United [4][9][12] - The airline has historically maintained a streak of profitability and has been resistant to charging for bags, but recent financial pressures have prompted a reevaluation of this stance [4][15][24] Customer Reactions - Customers express disappointment and consider switching to other airlines, indicating that the free bag policy was a significant factor in their loyalty to Southwest [2][5][20] - The airline's social media engagement has seen a notable increase in responses following the announcement, reflecting customer outrage [17][19] Market Dynamics - The airline industry is witnessing a trend where companies are pulling back on free perks, with many benefits now reserved for loyalty program members or higher-tier ticket holders [6][9] - Competitors like Delta and United are also adapting their services, offering perks tied to loyalty programs, which may attract customers away from Southwest [7][20] Financial Implications - Following the announcement of the bag policy change, Southwest's shares rose nearly 9%, while shares of competitors fell, indicating investor optimism about the potential for increased revenue [11][12] - Southwest anticipates that the changes could add hundreds of millions of dollars to its bottom line, despite the risk of losing market share [11][15] Operational Considerations - The airline is preparing for an increase in carry-on luggage as customers may opt to avoid checked bag fees, which could impact operational efficiency [22][23] - Southwest is implementing measures to manage the expected rise in carry-on bags, including retrofitting aircraft with larger overhead bins [23][24][26]