Southwest Should Charge for Baggage
OK, I’m going to get in trouble here. I think Southwest Airlines should start charging for baggage. Before you start yelling at your computer (or through it), listen to my reasoning.
First of all, I’m not speaking as a passenger. As a frequent traveler myself, I am flabbergasted by how poorly the big legacy carriers tend to treat their passengers, and I love the fact that Southwest doesn’t ding my credit card at the check-in kiosk. And as a marketer, I know the public relations firestorm doing so would create. But the move makes sense from both a financial and branding perspective.
As of June 30th, Southwest had lost $37 million. For the first time in 37 years, the airline might be facing an annual loss (of as much as $70 million, according to industry analysts). While not the largest airline by revenue, Southwest does carry more passengers than any other airline–more than 100 million in 2008. If just ten percent of those passengers paid $10 per checked bag, that’s an additional $100 million in revenue. And at ten bucks per bag, Southwest would still be well under the $20 and $30 per bag that other airlines charge.
Charging for checked bags wouldn’t be as odd as you might think for Southwest. The airline already charges $75 to carry a pet on board. It charges $25 for unaccompanied minors. Its Business Select fares allow passengers priority boarding and “one premium beverage of your choice” for an additional $10 to $30. And in a little-noticed footnote on its website, Southwest says, “Effective June 17, 2009, the charge for checking a third bag or a bag weighing 51-70 pounds will be $50.” Sure, if Southwest started charging for checked bags some passengers might defect, but there’s really nowhere for them to go. And even if they did leave for a period of time out of protest, Southwest’s other strengths would likely bring them back.
Of course, there is the matter of Southwest’s high-profile “Bags Fly Free” campaign. The company has made hay out of the fact that while its competitors are nickel-and-diming their customers, Southwest won’t. It’s true that if Southwest were to change its policy it would have a short-term public relations challenge on its hands, but from a long-term branding standpoint charging for bags makes sense for a low fare, no-frills airline. Over the course of time, the protests would die out. Especially if Southwest quietly stops promoting its policy for a period of time before the change is made.
Baggage charges are here to stay–there’s no way the airlines can afford to give them up. To remain competitive, sooner or later Southwest will be forced to capture the revenue that it’s currently leaving on the table (or counter, as it were). While the idea may be highly unpopular, Southwest has an obligation to its shareholders and employees to prepare for that day. Given the track record of this smartly-managed company, I suspect it’s already doing so.
OK, let me have it.
I'd rather they charge for the convenience of carrying on the luggage. More and more people are bringing on bags that just barely fit it in the overhead bin. It slows up the boarding process, creates anger and frustration among the passengers.
Comment by Abbie S. Fink — Wednesday, August 26, 2009 @ 7:36 AM
Disagree. Southwest in the business of transporting people. Most people come with luggage.
Maybe they should charge $10 more per ticket, but don't insult me by charging $200 for my week long trip then at $10 on each end for the privilege of bringing my underware.
Comment by Kathryn Ray — Wednesday, August 26, 2009 @ 9:47 PM
I realize you're trying to be provacative, and apparently you're successful, since I'm back for a second comment.
Southwest understands their processes and the value they provide to their customers. They turn planes faster than anyone else. Their staff is happy and helpful… all of them. This is not true with the other airlines.
I was disappointed to learn I have to pay for checked luggage on an upcoming Frontier flight. I'm using Frontier only because Southwest doesn't go to where I'm going and they were the least expense of all the other guys.
The cost of providing your services should be included in the price. Don't nickel and dime your customers for every little thing. That is a sure way to have fewer customers.
There's a reason Southwest has the most passengers. Trying to convine them, or anyone else that they should be just like all of the other mediocre providers is missing the point.
Comment by Kathryn Ray — Wednesday, August 26, 2009 @ 10:50 PM
I would be excited to pay only $10 to check my bags. Point well taken, Steve.
Comment by adetavis — Thursday, September 10, 2009 @ 4:49 PM
This post it totally boneheaded.
4 months later, Southwest is reporting that the bags fly free strategy is already adding $800m in revenues — and the market is still shifting towards them as more and more people get hit by legacies' fees and consciously choosing to book their next trip on Southwest.
Source: http://www.thestreet.com/story/10642403/1/southwest-ceo-free-bags-800-million.html
Comment by MikeB_SF — Friday, December 11, 2009 @ 7:00 PM
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