Southwest Airlines’ 50-Year-Old ‘Two Bags Fly Free’ Policy Ends Tuesday, Basic Economy Fares Set To Debut – Southwest Airlines (NYSE:LUV)

Southwest Airlines LUV is set to start charging customers for checked bags, a move that sets it on par with other airlines.

What Happened: Southwest Airlines will implement the change from Wednesday onwards, thereby ending its “two bags fly free” policy that has been in place for over 50 years. This decision is part of a broader shift in Southwest’s business model, which includes the introduction of basic-economy tickets and the abandonment of its open seating policy, reported CNBC.

The exact fee for checked bags is yet to be disclosed, but it is expected to be in line with industry competitors who typically charge around $35 to $40 for the first checked bag on domestic flights.

The new policy will be applicable to Southwest’s Basic, Wanna Get Away Plus and Anytime fares. However, customers with top-tier status in the Rapid Rewards loyalty program, Business Select fares and those with a Southwest Airlines co-branded credit card will still be entitled to two free checked bags.

Additionally, Southwest Airlines will begin offering basic-economy tickets starting Wednesday. These new “Basic” fares restrict changes, have shorter six-month credit validity and assign the latest boarding groups. Additionally, the airline is discontinuing its previous lowest-tier option, the “Wanna Get Away” fare.

Southwest Airlines, long known for its open-seating policy, will also begin offering seat assignments on flights starting in 2026. The airline also plans to add extra legroom seats at higher prices, aligning with competitors’ practices.

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Why It Matters: The decision to charge for checked bags was announced in March after months of pressure from Elliott Investment Management, an activist shareholder that secured five board seats last year.

Earlier this month, the airline announced a new policy requiring passengers to keep portable chargers in plain sight, a move aimed at preventing incidents involving lithium batteries catching fire mid-flight.

Furthermore, in April, amid ‘Macroeconomic Uncertainty,’ Southwest discarded its profit guidance, even as it reported better-than-expected Q1 results. These changes reflect Southwest’s efforts to adapt to the evolving aviation industry landscape and maintain its cost-efficiency and competitiveness.

In a favorable development for the company, the Trump administration recently halted a lawsuit against Southwest, initiated by the Biden administration over alleged persistent flight delays.

Benzinga’s Edge Rankings place Southwest Airlines in the 74th percentile for momentum and the 69th percentile for value, reflecting its strong performance in both areas. Check the detailed report here. 

Over the past month, the shares of Southwest Airlines surged 16.14%, with a 4.3% decline in the past 5 days.

Photo: Shutterstock

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.