Southwest bag fees: ‘Slaying of the sacred cow,’ says United CEO

Southwest Airlines’ plan to start charging for checked bags may not only be good for its bottom line but also for other carriers, United Airlines CEO Scott Kirby said.

“It’s the slaying of the sacred cow,” Kirby said at a J.P. Morgan investor conference on Tuesday, hours after Southwest unveiled the new fees.

He added that he believes the move will be “good for everyone” — referring to the larger U.S. airline industry where bag fees are standard.

The more you know: The best time to book flights for the cheapest airfare

Dallas-based Southwest will begin charging checked bag fees on new bookings from May 28. While it did not disclose the cost of the new fees, most U.S. airlines charge $35 for the first checked bag and more for additional luggage. The only travelers exempt from Southwest’s new fees are its top-tier A-List Rapid Rewards frequent flyers, travelers who purchase full Business Select fares and holders of its cobranded credit card.

There is no word yet on whether Southwest will add carry-on bag fees, too.

As many of Southwest’s standout features are discontinued or diluted — and the airline more closely resembles the rivals it once claimed to be different from — it remains to be seen if loyal passengers will stick around.

A tsunami of change

The magnitude of Southwest’s new checked bag fees cannot be understated. The idea that “bags fly free” on Southwest flights has been central to its marketing for nearly two decades, especially as checked bag charges became standard at competing airlines. To this day, it remains a significant differentiator for the airline.

“There’s a very high awareness of our bags fly free policy,” Ryan Green, the chief transformation officer at Southwest, said in September. “It is far and away the top feature that differentiates Southwest from our competitors, and it is one of the top criteria in why customers choose Southwest Airlines.”

After studying the market, Southwest found that bag fees would result in “too much defection in future flying, even in markets where we’re strong, that more than offset the ancillary revenue we’d earn from bag fees,” Green continued.

That was among the reasons why, at its September investor day, Southwest executives said the airline would not add bag fees even as it adopted assigned seating, added premium seats and otherwise sought ways to wring more money out of customers.

Southwest CEO Bob Jordan sang a very different tune on Tuesday.

“Actual customer booking behavior through our new booking channels did not show that we were getting the same benefit from our bundled offering with free bags, which has led us to update the assumptions,” he said on the airline’s observations after listing its flights on popular travel search websites, including Expedia and Google Flights.

Southwest’s chief operating officer, Andrew Watterson, added that the carrier was “over delivering” to travelers who book its cheapest fares, known as Wanna Get Away.

Investor driven initiatives

Southwest’s changes are driven, primarily, by pressure from investors. After taking a roughly 11% stake in the airline last year, activist investor Elliott Investment Management succeeded in gaining six seats on the airline’s 13-seat board of directors and pushing the retirement of chairman and former CEO Gary Kelly.

Since the board changed, Southwest has focused on boosting profits and raising its share price. The airline made its first-ever layoffs in February when it cut 15% corporate workforce. Now, with bag fees, it is reaching deeper into travelers’ wallets.

“I see very much excitement about our future but the core of who we are and what we stand for is not changing,” Jordan said in response to a question on culture. He added that, for example, assigned seating is something employees want while acknowledging that the layoffs were “very difficult.”

Elliott raised its stake in Southwest to nearly 20% in February.

Change is coming: Southwest Airlines reveals new boarding and seating process

Southwest’s future

The question in the industry now is, “How much change is too much change at Southwest?” The airline has a notoriously loyal customer base that loves its low fares, frequent flights and generally quirky staff. How many of those flyers jump ship as Southwest becomes, essentially, like all of its competitors is an open question.

Kirby said Tuesday that he thinks any traveler share shift away from Southwest is only likely to occur at the “margins.” In other words, the numbers would be small.

In his comments on the decision-making behind the new bag fees, Jordan implied that Southwest also sees a minimal shift in passenger defection.

We will know the result soon. The changes at Southwest already began earlier this month with new Rapid Rewards earning rates; redemption rates will change later this month. Bag fees begin in May. Then, in the third quarter, the airline will begin selling assigned seats and its new premium seats; travelers will see both policies onboard in early 2026.

“It is a really exciting time at Southwest Airlines,” Jordan said with maybe a hint of irony.

Related reading: