Southwest Airlines Receives Warning From Expert

Earlier this year, Southwest Airlines officially ended its longstanding "bags fly free" policy as the airline began charging customers for checked bags in an attempt to boost slumping profits. However, one expert warns that the timing of the change may cause problems for the airline.

Southwest Airlines officially began charging customers for checked bags back in May, with the first checked bag priced at $35 and $45 for an additional bag. While the airline hoped the increased revenue from checked bags would help boost profits, it has not exactly worked out that way.

In their most recent earnings call, Southwest reported less-than-expected revenue in their Q2 earnings with no noticeable boost from checked bags charges. In fact, executives admitted that basic economy sales slumped immediately following the checked bag charges.

This is not necessarily good news for Southwest.

While Southwest hoped that the new bag charges would boost profits, Katy Nastro, travel expert at Going, has issued a pretty major warning for the airline, as she pointed out that it was a very bad time to implement these changes, given the economic environment.

Tariffs and an unpredictable economic future have led to a soft travel market, making it a very bad time for Southwest to make such a major change – and the early numbers indicate it was not a great idea.

“What’s notable is the fact basic economy ticket sales tanked after they made changes in May, and are just now rebounding,” Nastro told Customer Experience Dive. “The next half of the year will give us a better gauge into how all of these changes have played out, but so far, their timing could not have been worse amid a soft market.”

“Southwest routes are majority domestic, which means they were likely to feel the biggest sting,” Nastro said.

Southwest claims that everything is going well, with CEO Bob Jordan claiming that revenue from checked bag fees has "exceeded our expectations so far" and CFO Tom Doxey estimating that bag fees will result in more than $350 million of earnings before interest and taxes for the full year 2025.

However, Nastro is rather unconvinced.

“One month of selling a ‘basic economy’ product they saw their revenue per available seat mile decline by .5 percentage point, and that’s with charging for bags,” Nastro said. “While they say bag fees are looking healthy, with softer demand, they’ve likely had to discount base fares which means they aren’t making pure profit from bag fees.”

While Southwest is seeing money from checked bag fees, that doesn't mean they are going to boost profits overall.