Southwest Airlines Ends Free Checked Bags Policy Amid Investor Pressure
March 12, 2025 – Southwest Airlines has announced the end of its long-standing free checked baggage policy, a move that has sparked reactions from competitors and investors alike.
Starting May 28, only select premium members will continue to enjoy the "bags fly free" benefit. Other passengers will now have to pay for their first and second checked bags. This decision comes as part of a broader business strategy to boost revenue and meet investor demands.
The change has drawn reactions from rival airlines. United Airlines CEO Scott Kirby described it as "slaying the sacred cow," predicting that it will drive some price-sensitive customers away from Southwest. Delta CEO Ed Bastian echoed this sentiment, stating that Southwest passengers who preferred free baggage might now consider other airlines.
Even Amtrak took the opportunity to promote its service, posting on social media that train passengers can still bring two carry-on bags for free.
Why Is Southwest Making This Change?
Southwest, which held 17.3% of the U.S. domestic airline market as of late 2024, has been under increasing pressure from investors due to declining profits and underwhelming passenger volumes.
Last year, Elliott Investment Management, which owns an 11% stake in the airline, criticized its outdated strategies and pushed for management changes. As a result, Southwest has undertaken a major overhaul, including:
Southwest CEO Bob Jordan justified the decision, explaining that the airline carries twice as many checked bags as its competitors, increasing operational costs.
Stock Performance and Future Challenges
Despite these changes, Southwest's financial performance remains weak. The company's stock has dropped 9% so far this year and is down 26% over the past five years, while competitors like United Airlines have gained over 80%.
With strong travel demand but declining passenger numbers, Southwest is banking on these policy shifts to regain its financial footing. However, with competitors eager to capture its dissatisfied customers, the airline faces a tough road ahead.
Southwest has yet to officially comment on the decision outside of business hours.
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