Southwest Airlines announced on March 11, 2025, a significant overhaul of its long-standing customer policies, including the end of its 'two bags fly free' perk. For tickets purchased on or after May 28, 2025, most passengers will be charged for checked luggage, bringing Southwest in line with other major U.S. carriers.
Exceptions to the new bag fees include Business Select fares and A-List Preferred members (two free bags), A-List members (one free bag), and Southwest credit card holders (one free bag). The airline also introduced a new basic economy fare, which is non-refundable, does not allow changes, and has flight credits that expire in six months.
These changes are projected to add $800 million in earnings before interest and taxes (EBIT) in 2025 and $1.7 billion in 2026, contributing to a total of $4.3 billion in incremental EBIT by 2026. This strategic pivot is a direct response to pressure from activist investor Elliott Investment Management and aims to significantly boost revenue.
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