Southwest Airlines Ends Free Bags and Open Seating in Major Policy Shift

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Southwest Airlines is abandoning its iconic "bags fly free" policy, a move that sent its stock soaring 9% amid pressure from activist investors.

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Starting May 28, only elite loyalty members, business class passengers, and airline credit card holders will avoid checked bag fees.

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Southwest CEO Bob Jordan reversed course after insisting last fall that free bags were "the number one issue" attracting customers to the airline.

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The Dallas-based carrier eliminated 1,750 corporate jobs last month—the first major layoffs in its 53-year history.

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Delta and United executives pounced on the news, with United's CEO calling it "slaying the sacred cow" and predicting it would be "good for everyone else.

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Southwest is also scrapping its open-seating tradition in favor of assigned seats and introducing basic economy fares with restrictions.

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The airline carries nearly twice as many checked bags as competitors, with executives betting the new fees will outweigh potential customer losses.

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Even Amtrak joined the conversation, reminding customers in a social media post that train passengers can bring two carry-on bags for free.

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Elliott Investment Management, which holds an 11% stake in Southwest, has pushed for modernization as the airline's stock dropped 26% over five years.

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