Southwest is sunsetting one other beloved perk.
The airline on Tuesday mentioned it can finish its decades-old free bag verify coverage – one other break from custom as the corporate tries to push back advances from activist traders.
Southwest’s newest main change follows a monthslong marketing campaign from Elliott Funding Administration, which took a stake within the airline final 12 months, gained 5 board seats and unsuccessfully fought to oust CEO Bob Jordan.
Final summer time, the Dallas, Texas-based airline made a serious capitulation when it ended its iconic pick-any-seat coverage and carried out an ordinary assigned seating course of.
Now, Southwest is hoping the bag fare will enhance its revenues.
The information despatched shares within the firm hovering 11.9% premarket on Tuesday.
Clients in all however the top-tier class should pay to verify their baggage for tickets bought beginning Could 28, in line with a press launch.
Frequent flyers with an “A-List Preferred” standing will nonetheless get two free baggage, and A-Listing stage members will get one free bag.
Southwest bank card holders will even get one free checked bag.
The airline didn’t disclose how a lot it could cost for a checked bag.
Rivals like Delta, American and United cost $35 for passengers’ first checked bag.
The payment is usually greater for a second bag.
The bag charges might come as a shock to clients, after Southwest lengthy pledged to carry onto the uncommon perk.
Jordan has bragged that, other than prices and schedule, Southwest’s “bags fly free” coverage is commonly cited as the highest purpose why clients select the airline.
Throughout an investor day in September, Southwest mentioned “rigorous research” defended the advantages of the free-bag coverage for the airline and clients alike.
The airline claimed it could acquire between $1 billion and $1.5 billion from bag charges, however lose $1.8 billion of market share from rolling again the perk.
“What’s changed is that we’ve come to realize that we need more revenue to cover our costs,” COO Andrew Watterson instructed CNBC. “We think that these changes that we’re announcing today will lead to less of that share shift than would have been the case otherwise.”
Southwest on Tuesday additionally introduced plans to launch a brand new, fundamental economic system fare on its lowest-priced tickets bought beginning Could 28.
The airline can also be altering its Fast Rewards system so passengers will earn extra frequent flyer miles consistent with how a lot they pay.
Flight credit for tickets bought beginning Could 28 will expire in a single 12 months, or earlier, relying on the kind of fare bought, Southwest mentioned.
“These strategic moves, aimed to deepen and reward loyalty between Southwest and its most engaged Customers, create new opportunities to reach consumers who value fare above everything else,” the airline mentioned in an announcement.
Southwest final 12 months introduced that it could begin assigning seats, breaking from one other longstanding custom.
The airline additionally revealed plans to promote particular seats with additional leg room and the launch of in a single day flights this February.
Final month, Southwest introduced it could be slashing 15% of its company workforce – or 1,750 jobs – because it seeks to chop prices.
The corporate mentioned a lot of the layoffs could be accomplished by the tip of the second fiscal quarter, and can save the corporate about $210 million in fiscal 12 months 2025 and $300 million for 2026.
