Every once in a while, reporters or Wall Street analysts will ask Southwest Airlines officials if they plan to keep their policy of allowing two free checked bags in the face of an industry-wide trend toward more and more fees. That happened again at a business travel conference in Florida this week.
The question is especially relevant now in view of JetBlue’s recent changeover to a new fare structure that no longer allows a free checked bag for all passengers, leaving Southwest as the industry’s sole remaining outlier on the issue… and in view of Wall Street’s unrelenting pressure on Southwest to pile on the fees like everybody else in order to strengthen its bottom line.
But Southwest’s answer was the same as before: Chief Executive Gary Kelly said there are no plans to charge for checked luggage. Southwest has long maintained that while its two-free-bags policy (and its no-change-fee policy) deprives it of considerable fee revenues, that is more than made up for by the added customers it brings in.
And in view of the airline’s financial performance, it’s hard to argue the point. Southwest last week reported that its $691 million net income in the second quarter was an all-time record — and its ninth consecutive quarter of record profits.
Southwest said that its passenger load factor also hit a new record for the quarter, at 84.6 percent. While its major competitors continue to keep a lid on capacity expansion, Southwest said its second quarter capacity grew by seven percent year-over-year.
The airline’s most dramatic growth is coming at Dallas Love Field thanks to the end of Wright Amendment restrictions there, which allowed Southwest to add a number of new longer-haul routes. And it is growing at Houston Hobby as well, where its focus is on international routes; it plans to add eight of them there this year.
Readers: Do you think Southwest should stick with its two-free-bags policy, or throw in the towel?
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