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Fitch Warns Southwest Airlines' New Baggage Fees Could Undermine Brand Loyalty

Transportation and Logistics

Business Honor
04 April, 2025

Baggage fee changes may boost revenue but risk damaging customer trust and identity.

Southwest Airlines' latest decision to introduce checked bag fees for the first time in its history may jeopardize its long-standing brand image and competitive edge, Fitch Ratings reports.

The carrier, which has long distinguished itself from rivals by offering two free checked bags per traveler, announced plans to start charging baggage fees as part of more extensive cost-cutting and revenue-enhancing measures. The change represents a dramatic departure from the airline's customer-friendly policies and comes as the industry continues to face pressures to enhance profitability.

Fitch analysts cautioned that the changes might bring higher short-term revenue but could also alienate some loyal customers who appreciate Southwest's "bags fly free" guarantee. The agency noted that the strong brand reputation of the airline has long protected it in a very crowded and price-sensitive market.

"Southwest's value proposition has rested on simplicity and customer service," the report said. "Moving away from that model would diminish its pricing power and its customer goodwill."

Along with baggage charges, the airline is venturing into new sources of revenue like upgraded seating and loyalty program overhauls. Though these changes will win some over, analysts state that they stand to dilute the brand and can't be expected to make up for would-be customer defections.

Southwest has been hit with higher cost pressures from fuel volatility, labor costs, and less rapid post-pandemic rebound in certain markets. Therefore, the company comes under increasing pressure to develop alternative means of preserving profitability without damaging its essential brand identity.

Fitch concluded that strategic adjustments must be made but careful execution and transparent communication will be paramount in preserving customer trust as the carrier makes this transformation.