Sothwest Airlines is ending its free checked bag policy.
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Southwest Airlines has announced the end of its signature “bags fly free” policy, a move that could significantly alter the airline’s distinctive market position. Starting May 28, 2025, only select customers will be eligible for free checked bags – primarily the airline’s most frequent flyers and those with premium fares or co-branded credit cards.
Southwest is Joining the Pack
For decades, Southwest built its brand on being the anti-airline – a customer-friendly alternative to the nickel-and-diming practices of its larger competitors. The carrier differentiated itself with free checked bags, no change fees, open seating, and a straightforward fare structure.
Now Southwest is dismantling these differentiators:
- Checked bags will soon require payment for most customers.
- Assigned seating is coming.
- A new “Basic” fare tier is being introduced.
- Flight credits will expire after one year (or just six months for Basic fares).
- The loyalty program is shifting to variable redemption rates.
These changes are similar to the business practices of United, American, and Delta – the very airlines Southwest once positioned itself against.
Revenue vs. Brand Identity
The motivation behind these changes is clear: Southwest wants to boost revenue through ancillary fees and attract new customer segments. CEO Bob Jordan referenced returning to “levels of profitability that both we and our Shareholders expect” in the announcement.
This approach may provide short-term financial benefits. After all, baggage fees alone generate tens of billions annually for the major carriers. However, the long-term strategic consequences and effects on customer loyalty could be substantial.
How Will Southwest Differentiate Itself?
Marketing expert Jack Trout’s famous maxim “differentiate or die” applies perfectly to Southwest’s situation. By eliminating its most distinctive features, Southwest risks becoming just another airline competing head-to-head with much larger rivals.
Southwest built its success on being different – not just in marketing, but in its entire business model. Its point-to-point network, single aircraft type, and straightforward pricing created operational efficiencies while delivering what customers wanted: simplicity and value.
The airline’s new direction puts it in direct competition with carriers that have more resources, larger networks, and established premium products. Without meaningful differentiation, how will Southwest convince customers to choose its flights over competitors offering essentially the same product?
What Customers Value at Southwest
When I wrote about Southwest last June, the airline was facing pressure from activist investor Elliott Investment Management, which had built a nearly $2 billion stake in the company. Elliott viewed the free bag policy as a “missed opportunity” to generate revenue.
At the time, I suggested that adding bag fees “risks alienating the airline’s customers who have come to expect this perk.”
That moment has now arrived, and Southwest must balance revenue enhancement against customer loyalty. While Southwest believes it’s rewarding its “most engaged customers,” it’s simultaneously removing a benefit that all of its customers appreciated.
Can Southwest Maintain Its Identity?
Southwest faces an existential question: Can it remain “Southwest” while adopting the same practices as its bigger competitors?
The airline insists it will maintain its core values through its “amazing people who deliver great hospitality.” This suggests Southwest believes its culture and service quality – not its policies – are its true differentiators. Indeed, on those rare occasions when I’ve flown Southwest, I’ve enjoyed the quirky humor of their gate agents and flight attendants. They aren’t afraid to let personality show even in formulaic announcements, a contrast to the robotic delivery one experiences at the big three airlines.
But this assumption is risky. Customers often make decisions based on concrete factors like price, fees, and convenience rather than more subjective elements like service quality. And “friendly service” is claimed by virtually every airline, making it a weak point of differentiation.
Southwest’s Strategic Gamble
Southwest is making a calculated bet that the additional revenue from bag fees and other changes will outweigh any loss of customers who valued its unique approach.
The danger is that by becoming more like its competitors, Southwest may find itself in a no-win situation: neither distinctive enough to command loyalty nor large enough to compete effectively with the major carriers on their own terms.
For Southwest’s sake, one hopes that the airline has thoroughly analyzed these risks. History suggests that abandoning core differentiators rarely ends well for brands – especially those whose identity is built around being different.
