Southwest Airlines Two Free Checked Bags: Here To Stay

Here's a hot take Ben, charging for checked bags will cause boarding and flight delays since people want to bring on carry ons and take up time to fill up the bins. Southwest can easily board a plane in 30 mins or less while others take close to 40 even 50 minutes. Why do you think that is?

Japanese airlines don't charge for checked bags either and they board in less than 30 minutes too, so does Singapore Airlines as well. So my rationale here is that not charging checked bags can improve OTP

Great to hear. Last thing we need is more Ma and Pa Kettles schlepping more bags onto the plane slowing down both the boarding and deplaning processes.

How is that a hot take?

Of course that’s true, but the operational speed benefit comes with a lost revenue opportunity.

The choice of which alternative is “best” isn’t obvious.

I think it would be corporate suicide for them to charge for checked bags. That other airlines are bilking their customers with checked bag fees doesn't make it a wise move, just a corporate move, a 'quarterly earnings statement' thing instead of 'this is one of the biggest draws to our entire brand and we're not going to flip the bird to our entire customer segment' move.

What I WOULD do however, is lower the threshold for 'overweight baggage fees' and charge on all bags from there. You don't get 2 bags free but get to pack 69.9 lbs into each bag.

If they charge for bags they have to lower fares since current fares are usually higher than competitors I have been flying them this year because they are currently the only nonstop and I have the companion fare

Comparing their fares to others right now makes them more expensive but with free bags then they are closer to competitors

I disagree, at least at this time. Southwest doesn’t have the brand equity to do something as dramatic for the airline as charging for checked bags. Most fliers see Southwest as an airline with weird boarding, no perks of any kind, and frankly high fares. At least you get free bags though. Until people see the change in terms of new seating, extra leg room, etc, you can’t devalue the offering further by not charging for bags. Maybe they can get away with it in a couple of years after people see the new changes.

We all know what they should have done :

Keep 1st bag free, and then charge for the 2nd.

Still can advertise free bag, and pick up ancillary revenue. Head scratcher that this didn't happen.

I wonder if Southwest considered families as a driving factor to keep this bag policy in place. Southwest might not be cheaper for an individual on a typical short-haul flight, but when flying with the kids and all of their stuff Southwest becomes a much better value proposition knowing each ticketed passenger gets two free checked bags.

This will get walked back. Don't hold your breath.

I'm sort-of wondering whether management isn't pushing back a bit against Elliott.

Then again, I've wanted to see management at some company "cordially invite [activist investor] to seek out better returns elsewhere" for some time.

Apparently an SWA internal analysis determined that while they could earn something like $1.2b from checked bag fees, they would stand to lose as much as $1.5b in decreased ticket sales (for a net loss of ~$300m) due to people now comparison shopping with other airlines where they have to pay for bags anyway. Regardless, with the other changes being introduced - especially assigned seating and introduction of (theoretically) premium seating - doing away with free checked bags might have been seen as too much of a change all at once.

The alternative "low cost" airlines are increasingly becoming like legacy carriers in addition the legacy carriers now have deeply discounted fares that include nothing like the low costs would. Many fly Southwest because of such things as just getting you there with nothing else. I guess some loyal Southwest fans will not be loyal anymore.

I fly Southwest a lot, and my driving force to fly SWA is free bags.