SouthWest Airlines said on Tuesday that it would start with charging bags, so that another long -term policy would be terminated that it had distinguished it from other airlines, because it wants to increase income and lower costs.
Customers with a high loyalty status are saved from the reimbursement, but all others will have to pay for checked bags for flights booked from 28 May. The announcement represented the newest decision of Southwest to drop a practice that had made it unique – and attractive – to customers.
The airline also works to add premium seats with extra legroom, to put an end to the open-seat policy and recently started offering red eyes. When it announced those changes in September, Southwest said that it would retain his beloved bag policy, which, according to his own studies, was an important distinguishing factor for customers.
When Glen Hauenstein, the president of Delta Air Lines, was asked Tuesday at an investor conference about whether the shift would benefit other carriers, he said: “There are clearly some customers who have chosen them and now those customers are for grabbing. We will see how that takes place. “
But Southwest's policy to allow two free checked bags was expensive. The airline wears almost twice as many bags as his colleagues who can slow down the operations, said his Chief Executive, Bob Jordan, at the conference.
And despite the studies of the airline that demonstrate the popularity of the policy, newer data on sales via third-party websites suggests that the free bags were not as powerful as previously thought.
That data “have not shown that we get the same advantage of our bundled range with free bags, so we have updated the assumptions,” he said.
Southwest has also had to deal with intense investor pressure to make changes, because it has had difficulty limiting costs in recent years. While other large airlines benefited from the increasing interest of the customer in premium and international journeys, Southwest lacked the high -quality range and routes to take advantage of those trends.
The Elliott Management Hedgefonds saw a chance. Last summer it was that it had collected a 10 percent interest in the southwest and started to insist on change, many months later announced. Elliott had also insisted on the expulsion of the Chief Executive of Southwest, Bob Jordan, but left that effort after the airline agreed to shake up his board of directors.
Customers who have the best loyalty status of the airline, prefer the A-list or buy his most expensive rate, business select, still receive two free checked bags. Others, including the status holders of the A-list, receive one free checked bag. Remaining customers must pay an amount that the airline has not yet announced.
Some customers on social media and observers in the industry criticized the move.
“I think we will remember today if the day Southwest died,” said Brett Snyder, a former insider from the industry writes about aviation on the Cranky Flier website, in a message on Tuesday. “The full value proposition – everything it has made differently – has disappeared faster than you can say” Elliott Investment Management “.
But some in the industry believe that the effects will be more limited. During the Investor Conference on Tuesday, Scott Kirby, the Chief Executive of United Airlines, said the move was a “big deal” and could be good for Southwest.
“It's killing a holy cow,” he said.
