Southwest Airlines ends its free bag policy: how changes affect careers
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Southwest Airlines Industry experts say some leisure travelers could be lost to rivals.
It was a policy that helped distinguish competitors from competitors for over 50 years and appealed to a wide range of contention. Budget-conscious travelers. Southwest announced this week that it will only offer free check bags to certain loyal and business-class customers starting May 28th.
“The idea of adding bag fees may work well in spreadsheets, but Southwest risks losing its share in the leisure travel market,” Peter McNally, global head of sector analyst at Third Bridge, told FOX Business.
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The change comes months after the company warned that it would begin offering assigned seats and premium seat options on all flights.
Both moves highlight how the company’s financial challenges have forced it to reassess its approach. Southwest was also one of several major US airlines this week, returning quarterly financial expectations as the industry competes for softer demand from economic uncertainty and other factors.
You can see Southwest Airlines Boeing 737 Max 8 plane parked at the gates of Baltimore Washington International Airport in Baltimore, Maryland. (Angus Mordant/Bloomberg via Getty Images)
The latest changes could potentially lead Southwest to lose out on long-distance flight competition, but not on the business as a whole.
Southwest has many short-distance flights that usually accommodate travelers who travel a day or overnight, and that are not checking their luggage. For these types of quick travel, Southwest continues to offer the most competitive fares on the market.
“A family of four who flew to Orlando in Southwest has more cost-competitive options like the Americans when they add a bag fee,” McNally said.
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The changes to the bag’s policy occur after the company warns that it will begin offering assigned seating and premium seat options on all flights. (Angus Mordant/Bloomberg via Getty Images)
For example, “Big Three” airlines (Delta, USA, United) have “strong loyalty programs that offer several premium options while being more competitive in the US leisure market,” McNally said.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| Luv | Southwest Airlines Co. | 31.00 | +0.90 |
+2.99% |
Southwest said this week it plans to introduce new base fares for lowest-priced tickets purchased after May 28th.
“Our experts see revenue opportunities from more premium options (extra legroom, for example), but those opportunities take time as the cabins need to be reconfigured,” McNally said, but not an instantaneous revenue increase from saying, “We’re charging these bags now.” ”
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However, McNally said basic economic fares are fairly standard as airlines cannot cut prices that much.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| aal | American Airlines Group Inc. | 10.67 | -0.26 |
-2.38% |
| ual | United Airlines Holdings Inc. | 69.90 | -2.56 |
-3.53% |
| Dal | Delta Air Lines Inc. | 43.92 | -1.38 |
-3.05% |
“The end of the low cost of the aviation industry has discovered a lower pricing limit. After all, Spirit went bankrupt. Costs rose during the pandemic due to the labor rate and stayed there,” he said.
Fuel costs have been lowered over the past few years and offer some relief, but their ability to provide very low fares is still limited. McNally said.