Southwest is setting another beloved perk to the sun.
The airline said Tuesday it would end its decades-old free bag check policy. Another break from tradition as the company tries to avoid progress from activist investors.
Southwest's latest major change follows a months-long campaign from Elliott Investment Management, which won stock in the airline last year, and fought to kick CEO Bob Jordan out of five board seats.
Last summer, the Dallas, Texas-based airline ended its iconic pick-annie policy and made a major surrender when it implemented a standard assigned seating process.
Now, Southwest hopes that the bag's fare will earn money.
The news sent out the company's shares on Tuesday, surged the market at 11.9%.
According to a press release, all customers except the highest class must pay to check the packages on tickets purchased from May 28th.
Frequent flyers with “A-List Priority” status get two free bags, while A-List level members get one free bag.
Southwest credit card holders will also get one free check bag.
The airline did not disclose how much to charge the checked bag.
Rivals such as Delta, America, United will charge $35 for their passengers' first check bag.
Usually, the second bag costs a higher price.
After Southwest pledges to hold on to a rare perk, the bag fee can shock customers.
Jordan boasted that, except for costs and schedules, Southwest's “bagfly-free” policy is often cited as the number one reason customers choose airlines.
On Investor's Day in September, Southwest said that “strict research” defended the benefits of a freebag policy for airlines and customers.
The airline claimed it would make between $1 billion and $1.5 billion from its bag fee, but lost $1.8 billion in market share from the PERK rollback.
“What changed is that we now realize we need more revenue to cover the costs,” COO said. Andrew Watterson told CNBC. “We believe these changes that we are making today will have less share shifts than would otherwise have been.”
Southwest also announced on Tuesday plans to launch new Basic Economic Fares with lowest-priced tickets purchased starting May 28th.
Airlines are also changing their rapid reward system, so passengers earn more frequent flyer miles along the payment amount.
Flight credits for tickets purchased starting May 28th will expire one year or earlier, depending on the type of fee purchased, Southwest said.
“These strategic moves aim to deepen and reward loyalty between the Southwest and its most enthusiastic customers, creating new opportunities to reach consumers who value fares more than everything else,” the airline said in a statement.
Southwest announced last year that it began allocating seats and would invade from another long-standing tradition.
The airline has also revealed plans to sell extra leg rooms and special seats this February with the launch of overnight flights.
Last month, Southwest announced it would cut 15% (1,750 jobs) of corporate workers in an attempt to cut costs.
The company said most of the layoffs will be completed by the end of the second fiscal quarter, saving approximately $210 million in fiscal year 2025 and $300 million in 2026.
