Southwest Airlines will charge to check bags for first time — breaking longstanding tradition

Southwest is sunsetting another beloved perk.

The airline on Tuesday said it will end its decades-old free bag check policy – another break from tradition as the company tries to ward off advances from activist investors.

Southwest’s latest major change follows a monthslong campaign from Elliott Investment Management, which took a stake in the airline last year, won five board seats and unsuccessfully fought to oust CEO Bob Jordan.

Last summer, the Dallas, Texas-based airline made a major capitulation when it ended its iconic pick-any-seat policy and implemented a standard assigned seating process.

Now, Southwest is hoping the bag fare will boost its revenues.

The news sent shares in the company soaring 11.9% premarket on Tuesday.

Customers in all but the top-tier class will have to pay to check their bags for tickets purchased starting May 28, according to a press release.

Frequent flyers with an “A-List Preferred” status will still get two free bags, and A-List level members will get one free bag.

Southwest credit card holders will also get one free checked bag.

The airline did not disclose how much it would charge for a checked bag.

Rivals like Delta, American and United charge $35 for passengers’ first checked bag.

The fee is typically higher for a second bag.

The bag fees may come as a shock to customers, after Southwest long pledged to hold onto the rare perk.

Jordan has bragged that, aside from costs and schedule, Southwest’s “bags fly free” policy is often cited as the top reason why customers choose the airline.

During an investor day in September, Southwest said “rigorous research” defended the benefits of the free-bag policy for the airline and customers alike.

The airline claimed it would gain between $1 billion and $1.5 billion from bag fees, but lose $1.8 billion of market share from rolling back the perk.

“What’s changed is that we’ve come to realize that we need more revenue to cover our costs,” COO Andrew Watterson told CNBC. “We think that these changes that we’re announcing today will lead to less of that share shift than would have been the case otherwise.”

Southwest on Tuesday also announced plans to launch a new, basic economy fare on its lowest-priced tickets purchased starting May 28.

The airline is also changing its Rapid Rewards system so passengers will earn more frequent flyer miles in line with how much they pay.

Flight credits for tickets purchased starting May 28 will expire in one year, or earlier, depending on the type of fare purchased, Southwest said.

“These strategic moves, aimed to deepen and reward loyalty between Southwest and its most engaged Customers, create new opportunities to reach consumers who value fare above everything else,” the airline said in a statement.

Southwest last year announced that it would start assigning seats, breaking from another longstanding tradition.

The airline also revealed plans to sell special seats with extra leg room and the launch of overnight flights this February.

Last month, Southwest announced it would be slashing 15% of its corporate workforce – or 1,750 jobs – as it seeks to cut costs.

The company said most of the layoffs would be completed by the end of the second fiscal quarter, and will save the company about $210 million in fiscal year 2025 and $300 million for 2026.