Final boarding call for free bags at Southwest as airline abandons a cherished perk

Key Points

• Starting Wednesday, Southwest will end its decades-long free checked bags policy for customers who aren’t Rapid Rewards elites, Business Select passengers, or co-branded credit card holders, requiring most flyers to pay standard bag fees.
• The airline estimated the new fees could generate about $1.5 billion annually but risk up to $1.8 billion in lost business from customers drawn by its prior luggage perk.
• Southwest is also rolling out new policies—mandating portable chargers remain in plain view due to lithium-ion fire concerns and replacing its 50-year open boarding system with assigned seating next year.
• Under pressure from activist investor Elliott Management, Southwest has cut 1,750 corporate jobs, added Elliott directors to its board and introduced extra fees for premium services to boost profitability.

It's the last day to book a flight on Southwest Airlines without being hit with a fee to check bags after the airline abandoned a decades-long luggage policy that executives once described as key to differentiating the budget carrier from its rivals.

The airline announced the change in March, saying at the time that the the new policy would start with flights booked on Wednesday.

Southwest said Tuesday that it will be charging $35 for a first checked bag and $45 for a second checked bag. Weight and size limits will apply for bags.

Southwest had built years of advertising campaigns around its policy of letting passengers check up to two bags for free. Under its new policy, people who haven’t either reached the upper tiers of its Rapid Rewards loyalty program, bought a business class ticket or hold the airline’s credit card will have to pay for checked bags.

Southwest will continue to offer two free checked bags to Rapid Rewards A-List preferred members and customers traveling on Business Select fares, and one free checked bag to A-List members and other select customers. Passengers with Rapid Rewards credit cards will receive a credit for one checked bag.

People who don’t qualify for those categories will get charged to check bags. The airline said in March that it also would roll out a new, basic fare on its lowest priced tickets when the change takes effect.

The airline estimated in September that charging bag fees would bring in about $1.5 billion a year but cost the airline $1.8 billion in lost business from customers who chose to fly Southwest because of its generous baggage allowance.

Another policy that will take effect on Wednesday is Southwest requiring passengers to keep their portable chargers in plain sight while using them because of concerns about the growing number of lithium-ion battery fires.

These aren't the only changes at Southwest. The Dallas airline previously announced that it was leaving behind another Southwest tradition, the open-boarding system it has used for more than 50 years. Southwest expects to begin operating flights with passengers in assigned seats next year.

The airline also said last year that it would charge customers extra for more legroom and offer red-eye flights.

Southwest has struggled recently and is under pressure from activist investors to boost profits and revenue. The airline reached a truce in October with hedge fund Elliott Investment Management to avoid a proxy fight, but Elliott won several seats on the company's board.

The airline announced in February that it was eliminating 1,750 jobs, or 15% of its corporate workforce, in the first major layoffs in the company’s 53-year history.

Shares of Southwest Airlines Co. rose 3% at the opening bell Tuesday along with other carriers in an up day for the sector.