Southwest Airlines, a pioneer in low-cost flying, has decided to charge for checked bags for the first time in its history. This move comes after pressure from Elliott Investment Management, which has pushed for changes in the airline’s business model. U.S. airlines collectively earned over $5 billion from baggage fees last year. Southwest’s new policy will apply to tickets purchased on or after May 28, with exceptions for elite frequent flyers and credit card holders. The airline has not disclosed the fee amount, but competitors charge $35 for a single checked bag. Southwest’s shares rose by about 9% following the announcement. The airline also plans to introduce a basic economy fare, change its frequent flyer program, and implement dynamic pricing for flight credits. These changes aim to increase revenue and cover rising costs, despite previous research suggesting that free bags were a significant factor in customer choice.
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