End Of Era

With activist hedge fund Elliott Management in the pilot's seat at Southwest Airlines, the budget carrier has eliminated its popular 'bags fly free' policy for the first time in its half-century of operations. 

Starting May 28, Southwest will only allow Rapid Rewards A-List Preferred members and passengers booking top-tier Business Select fares to check two bags for free. Frequent Flyer A-List members, Southwest credit card holders, and other select customers will be allowed one free checked bag. All other passengers will be charged for first and second checked bags. 

Southwest's policy changes came after Paul Singer's Elliott Management pressured the airline to end its 54-year history of offering free first- and second-checked bags. With this major value proposition now lost, the carrier will be seen as just another airline—on par with Spirit Airlines. 

For frequent Southwest flyers, here's what you need to know about the rule changes:

• 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. Southwest will credit one checked bag for Rapid Rewards Credit Cardmembers. Customers who do not qualify for these free bag options will be charged for their first and second checked bags (weight and size limitations apply). Changes will apply to flights booked on or after May 28, 2025.
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• The carrier recently adjusted the number of Rapid Rewards points Customers earn on qualifying flights. Customers now earn more points on Business Select fares while earning less on Wanna Get Away and Wanna Get Away Plus fares. Southwest Rapid Rewards, the carrier's loyalty program, will also introduce variable redemption rates across higher-demand and lower-demand flights.
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• These strategic moves, aimed to deepen and reward loyalty between Southwest and its most engaged Customers, create new opportunities to reach consumers who value fare above everything else. To align with these changes, Southwest will introduce a new, Basic fare on our lowest priced tickets purchased on or after May 28, 2025, in advance of offering assigned seating and extra legroom options.
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• Southwest continues to widen its distribution channels to reach new Customers, with flights and fare products now available to book through online travel agency Expedia, beginning last month.
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• Flight credits issued for tickets purchased on or after May 28, 2025 will expire one year or earlier from the date of ticketing, depending on the fare type purchased.

Southwest COO Andrew Watterson told CNBC, "What's changed is that we've come to realize that we need more revenue to cover our costs," adding, "We think that these changes that we're announcing today will lead to less of that share shift than would have been the case otherwise."

In the third quarter of 2024, Southwest's then-chief transformation officer, Ryan Green, told analysts: "The fact that free bags is a key driver of choice creates the risk that customers may choose the competition if we change the policy."

The timing of Southwest's policy change is really poor. It comes as the airline industry received a wake-up call from Delta Air Lines yesterday about softening consumer demand amid rising recession risks. 

Singer at Elliott appears to have gotten his way on the 'bags fly free' policy, turning Southwest into just another airline—like Spirit. And everyone despises Spirit. 

Article Source: http://www.Zerohedge.com

Video Source: http://www.wowzatv.network

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