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LUV
Fox Business
161 days

Southwest Airlines announces major change to long-standing passenger perk

1. Southwest Airlines will end its free checked baggage policy starting May 28. 2. Passengers will pay for first and second checked bags while some members remain exempt. 3. The change aims to drive revenue and adapt to evolving customer preferences. 4. Southwest will introduce assigned seating and a premium fare model to increase profits. 5. Financial pressures necessitated a reevaluation of Southwest's long-standing low-cost model.

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FAQ

Why Bullish?

The shift to paid checked bags may improve revenue, appealing to more segments, similar to past fare adjustments in the industry that led to increased profitability for airlines. Historical examples include American Airlines' 2008 decision to start charging for checked baggage, which resulted in significant revenue boosts despite initial backlash.

How important is it?

The systematic changes in pricing and service structure directly correlate with revenue generation potential, making them highly relevant to LUV's stock performance in the face of competition.

Why Short Term?

The policy change is expected to show immediate effects on ticket sales and revenue in the upcoming quarters, particularly with flights booked from May 28 onwards.

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