Customer Survey on Potential Bag Fees

Southwest Airlines is considering changes to its “bags fly free” policy in response to suggestions from activist investor Elliott Investment Management. The airline recently surveyed a sample of its loyalty members and general customers to gauge their opinions on potential scenarios where lower-cost fares would come with bag fees. The survey, which includes questions about travel habits and booking preferences, aims to understand customer sentiment towards these potential policy changes.

Southwest Airlines has traditionally distinguished itself with its policy of allowing passengers to check two bags free of charge, setting it apart from other major U.S. airlines. CEO Bob Jordan previously stated that the no-bag-fee policy was a key factor in customer preference for Southwest. However, the recent survey does not indicate any immediate plans to alter this benefit. The airline emphasizes its commitment to understanding customer priorities and preferences.

Adapting Business Model Amid Investor Demands

The survey explores scenarios where the least expensive “Wanna Get Away” fares might only include a personal item and a carry-on, while “Wanna Get Away Plus” fares could include one free checked bag. Higher fare categories, including “Anytime” and “Business Select,” would retain the benefit of two free checked bags.

This move comes as Southwest Airlines is already implementing other significant changes to its business model, such as phasing out its free-for-all seating policy, introducing a new premium class, and starting red-eye flights. These changes are part of a broader effort to modernize the airline in response to pressure from Elliott Investment Management, which has called for a revamp of the company’s leadership and strategic direction.

Elliott, which disclosed its stake in Southwest in June, has criticized the airline for not capitalizing on potential revenue sources, such as baggage fees. The global baggage fee revenue reached an estimated $33.3 billion last year. Southwest Airlines is scheduled to hold an investor meeting on September 26 in Dallas to outline its planned changes and strategies to better align with traveler preferences and enhance earnings.