Airlines Strategy
Southwest Airlines Ends Free Bags and Open Seating Policies
Southwest Airlines introduces baggage fees, assigned seating, and new fare structures effective May 2025, aligning with industry trends.
Southwest Airlines Ends Free Bags and Open Seating: A New Era of Policy Changes
Southwest Airlines, long celebrated for its customer-friendly policies, is entering a new phase that redefines its brand identity. As of May 28, 2025, the airline is implementing sweeping changes to its baggage fees, seating arrangements, fare structure, and loyalty program. These updates mark a significant shift from the budget-friendly model that has defined Southwest for decades.
Historically, Southwest differentiated itself from competitors by offering two free checked bags and an open seating policy, features that appealed to cost-conscious travelers. However, mounting financial pressures, increased operational costs, and evolving industry standards have prompted the airline to reconsider these long-standing perks. These changes are being introduced at a critical moment as the airline industry continues to recover from economic disruptions and rising fuel prices.
For frequent flyers and occasional travelers alike, understanding these new policies is crucial. This article breaks down the key updates, the rationale behind them, and what they mean for Southwest’s future and for the broader airline industry.
Major Policy Changes: What’s New at Southwest?
Introduction of Checked Baggage Fees
Perhaps the most headline-grabbing change is the introduction of checked baggage fees. For flights booked or modified on or after May 28, 2025, passengers will now pay $35 for the first checked bag and $45 for the second. This is a stark departure from Southwest’s long-standing “bags fly free” policy that has been a cornerstone of its marketing and brand loyalty.
Passengers with a Rapid Rewards Credit Card will receive a credit for one checked bag. However, for the average traveler without this card, the additional cost may influence their choice of airline, especially when comparing total trip expenses.
This move aligns Southwest with legacy carriers like Delta, American, and United Airlines, which have long relied on ancillary fees as a significant revenue stream. According to the U.S. Department of Transportation, U.S. airlines collected over $5.3 billion in baggage fees in 2022 alone—a figure that continues to rise annually.
“Southwest’s move to charge for the first checked bag is a significant shift that may alter customer perceptions but is understandable as the airline faces rising operational costs,” Henry Harteveldt, Aviation Analyst
End of Open Seating and Introduction of Assigned Seats
Another major change is the gradual phasing out of Southwest’s open seating policy, which allowed passengers to choose their seats upon boarding. Starting in the second half of 2025, Southwest will begin offering assigned and premium seating options, with full implementation expected in 2026.
This transition will include the introduction of new seat types, such as standard, preferred, and extra legroom options. The move is designed to offer more choice and potentially generate additional revenue through seat selection fees, a model already used by most major airlines.
While some passengers appreciated the flexibility of open seating, others found it stressful and inconvenient. Assigned seating could improve boarding efficiency and reduce in-flight conflicts over seat selection, though it may also erode one of Southwest’s most unique features.
New Fare Structure and Expiring Flight Credits
Southwest is also rolling out a new baseline fare—dubbed the “Basic” fare—replacing the current “Wanna Get Away” fare. This new fare tier will be the most restrictive, offering the lowest price point but with limited flexibility. It mirrors similar basic economy fares offered by other airlines, which often exclude perks like seat selection and early boarding.
In addition, flight credits issued on or after May 28, 2025, will now have expiration dates. Depending on the fare type, credits will expire either six months or one year after issuance. Previously, Southwest flight credits did not expire, which was another customer-friendly policy that set the airline apart.
Flight credits issued before May 27, 2025, will not be affected by this change and will remain valid indefinitely. However, the new expiration policy may push travelers to use their credits more quickly and reduce the perceived value of booking flexibility with Southwest.
Why These Changes Matter
Financial Pressures and Industry Trends
Southwest’s policy overhaul comes in response to growing financial challenges. Rising fuel prices, increased labor costs, and global economic uncertainty have pressured airlines to seek new revenue streams. Ancillary fees—from baggage to seat selection—have become an essential part of the airline business model.
According to airline consultant Mary Kirby, “This change signals a broader trend of low-cost carriers adopting legacy carrier revenue models, focusing more on ancillary fees to boost profitability.” For Southwest, these changes could help stabilize earnings and provide flexibility to invest in service upgrades and fleet improvements.
Moreover, the timing of these changes—just ahead of the busy summer travel season—suggests a strategic move to capture additional revenue from high travel volumes. It also allows Southwest to observe customer reactions and adjust accordingly before the holiday season.
“This change signals a broader trend of low-cost carriers adopting legacy carrier revenue models,” Mary Kirby, Airline Industry Consultant
Customer Reactions and Brand Identity
These updates have sparked mixed reactions among Southwest’s customer base. Long-time loyalists are concerned that the airline is abandoning its original ethos, while others welcome the added structure and options that come with assigned seating and fare tiers.
Consumer advocacy groups have raised concerns about increased travel costs and the potential for confusion during the transition. They emphasize the need for clear communication and transparency to minimize customer dissatisfaction and maintain trust.
Southwest has responded by enhancing its digital platforms to better inform travelers of the new policies. The airline has also increased its customer service capacity to handle questions and complaints as the changes roll out.
Implications for the Broader Airline Industry
Southwest’s shift reflects a broader convergence between low-cost and traditional carriers. As competitive pressures mount and operating costs rise, more airlines may adopt hybrid models that blend affordability with tiered services and fees.
Globally, airlines are re-evaluating their pricing strategies to balance customer expectations with financial sustainability. The success—or failure—of Southwest’s new policies could influence other low-cost carriers to follow suit or double down on their existing models.
Ultimately, the airline industry is moving toward greater segmentation, where travelers pay for exactly what they use. While this can offer more choices, it also places a greater burden on consumers to navigate complex fare structures and hidden fees.
Conclusion
Southwest Airlines’ decision to end its free baggage policy and open seating model marks a significant evolution in its business strategy. These changes align the airline more closely with industry norms and reflect the growing importance of ancillary revenue in maintaining profitability.
While the updates may alienate some loyal customers, they also offer new opportunities for customization and efficiency. The coming months will be critical in determining how well Southwest manages this transition and whether it can maintain its reputation for value and service in a more competitive and complex marketplace.
FAQ
What is the new baggage fee policy at Southwest?
Passengers will pay $35 for the first checked bag and $45 for the second, starting May 28, 2025. Rapid Rewards Credit Card holders receive a credit for one checked bag.
Is Southwest eliminating open seating?
Yes, the airline will begin rolling out assigned and premium seating in late 2025, with full implementation expected in 2026.
What happens to flight credits under the new policy?
Flight credits issued on or after May 28, 2025, will expire after six months or one year, depending on the fare. Credits issued before that date do not expire.
Sources: Associated Press, Southwest Airlines Official Website, U.S. Department of Transportation
Photo Credit: Southwest Airlines
Airlines Strategy
Lufthansa City Airlines Signs Three-Year Labor Agreement with ver.di
Lufthansa City Airlines and ver.di union finalize a collective labor agreement covering cockpit and cabin crews, effective 2026 through 2029.
Lufthansa City Airlines has officially reached its first comprehensive collective labor agreement with the ver.di union, establishing a new framework for its flying personnel. The agreement covers both cockpit and cabin crews, marking a significant milestone for the growing subsidiary of the Lufthansa Group.
According to a company press release, the new contract will remain in effect through 2029, providing at least three years of planning certainty. This stability is expected to lay the groundwork for further expansion, job creation, and enhanced career opportunities within Germany.
For Lufthansa Airlines, securing this labor peace is a strategic move designed to bolster its competitiveness in the fiercely contested European short-haul market. The agreement reflects the preferences of the majority of the airline’s flight crew, who selected ver.di as their union representative.
Details of the Three-Year Agreement
Pay and Framework Components
The newly negotiated package is built on two primary pillars, a pay agreement and a framework agreement. The pay component introduces adjustments to the current compensation structure, while the framework agreement standardizes working conditions across the board.
Through these negotiations with ver.di, Lufthansa City Airlines has established uniform working conditions for both flight deck and cabin personnel. The company noted in its release that this alignment is expected to yield greater operational stability, ultimately benefiting both passengers and employees.
Beyond base pay and working hours, the collective labor agreement includes specific provisions for company pension plans and performance-based compensation. The terms are set to take effect retroactively starting April 1, 2026, and will govern labor relations for the next three years, pending final approval by the relevant union and corporate committees.
Strategic Impact on Lufthansa’s Short-Haul Operations
Boosting Competitiveness at Key Hubs
Operating primarily out of the major hubs in Munich and Frankfurt am Main, Lufthansa City Airlines plays a critical role in feeding the broader Lufthansa Group network. The economic challenges of the European short-haul sector require a delicate balance between cost efficiency and reliable operations.
Company leadership views the agreement as a vital step forward. In the official press release, Peter Albers, Chief Operating Officer of Lufthansa City Airlines, highlighted the importance of the deal:
“We are very pleased with the successful start to our social partnership with ver.di. This collective labor agreement paves the way for positive development for our employees and provides the planning security we need for our growth and the opportunities that come with it,” Albers stated.
By securing a long-term commitment with its flying personnel, the airline aims to mitigate the risk of labor disruptions and ensure a stable foundation for its continued integration into the Lufthansa network.
AirPro News analysis
We view this collective labor agreement as a critical foundational step for Lufthansa City Airlines. As a relatively new entity designed to optimize short-haul feeder traffic for Lufthansa’s main hubs, the subsidiary’s success hinges on maintaining a competitive cost base while ensuring operational reliability. By locking in a three-year agreement with ver.di, Lufthansa Group effectively insulates this crucial operational arm from the immediate threat of strikes, which have been a recurring pain point across the European aviation landscape. Furthermore, establishing uniform conditions for both cockpit and cabin crews simplifies administrative overhead and fosters a more cohesive company culture during a critical growth phase.
Frequently Asked Questions
Who is covered by the new Lufthansa City Airlines labor agreement?
The agreement covers both cockpit (flight) and cabin crew members who are represented by the ver.di union.
How long is the collective labor agreement valid?
The contract has a term of three years, taking effect retroactively on April 1, 2026, and running through 2029.
What are the main components of the agreement?
The package includes a pay agreement that adjusts compensation structures and a framework agreement that establishes uniform working conditions. It also features provisions for company pensions and performance-based pay.
Sources
Photo Credit: Lufthansa Group
Airlines Strategy
Allegiant Air to Close Savannah Aircraft Base in November
Allegiant Air will shut down its Savannah/Hilton Head aircraft base on November 2, impacting local operations and personnel.
This article summarizes reporting by WSAV and Hank Tatum.
Allegiant Air is set to close its aircraft base at Savannah/Hilton Head International Airport this fall. The closure is scheduled to take effect on November 2, marking a shift in the ultra-low-cost carrier’s operational footprint in the Georgia region.
The decision was confirmed by the airline late this week. While the physical crew and aircraft base is shutting down, the full impact on specific flight routes and local personnel remains a developing situation as the airline adjusts its network.
Base Closure Details
According to reporting by WSAV, an Allegiant spokesperson confirmed the upcoming operational changes on Friday. The airline indicated that the decision came after a review of its network and resources.
In a statement provided to the local news outlet, the company noted the reasoning behind the shift:
“After careful evaluation, we have …”
The November 2 timeline gives the airline several months to transition its operations. Aircraft bases typically house crew members, maintenance staff, and stationed aircraft, meaning the closure will likely require personnel to relocate or transition to other roles within the company’s broader network.
Historical Context and Regional Impact
AirPro News analysis
The closure of the Savannah base represents a reversal of Allegiant’s previous expansion efforts in Georgia. We note that the airline originally announced the establishment of the two-aircraft base in Savannah in April 2019. According to a 2019 company press release, the carrier projected a $50 million investment and the creation of at least 66 high-wage jobs, including pilots, flight attendants, and maintenance technicians.
Base closures in the ultra-low-cost carrier sector are often driven by shifting seasonal demand, aircraft availability, and profitability metrics. While a base closure removes locally stationed aircraft and crews, airlines frequently continue to serve the affected airports using resources stationed at other hubs. Travelers flying in and out of Savannah/Hilton Head International Airport will need to monitor the airline’s future schedule releases to see if flight frequencies or destinations are impacted by this operational change.
Frequently Asked Questions
When is the Allegiant Savannah base closing?
The base is scheduled to close effective November 2, according to company statements provided to WSAV.
Will Allegiant stop flying to Savannah?
A base closure does not necessarily mean an airline will cease flights to the airport. Flights can still be operated by crews based in other cities, though specific route adjustments have not been fully detailed by the airline.
Sources: WSAV, PR Newswire
Photo Credit: Savannah Airport
Airlines Strategy
Air France-KLM Offers to Acquire Minority Stake in TAP Air Portugal
Air France-KLM submits a non-binding offer for a 44.9% stake in TAP Air Portugal as part of Portugal’s airline privatization process.
This article summarizes reporting by Reuters. This article summarizes publicly available elements and public remarks.
According to reporting by Reuters, the Franco-Dutch aviation giant Air France-KLM has formally entered the race to acquire a minority stake in TAP Air Portugal. The airline group submitted a non-binding offer on Thursday, April 2, 2026, marking a significant milestone as the Portuguese government advances its long-anticipated privatization plans for the national flag carrier.
As the first of Europe’s major airline conglomerates to officially put forward a bid, Air France-KLM is positioning itself to secure a highly coveted asset in the European aviation market. The move underscores the group’s strategic ambition to expand its footprint in Southern Europe and capitalize on TAP’s established transatlantic network.
Industry reports from Aerospace Global News indicate that the Portuguese government’s privatization framework currently offers a 44.9% stake to private investors, with an additional 5% reserved for TAP employees. While the state will retain a 50.1% majority holding in the immediate term, the privatization decree includes provisions that could allow the winning investor to acquire the remaining shares at a later date.
The Strategic Value of TAP Air Portugal
A Gateway to the Americas and Africa
For Air France-KLM, integrating TAP Air Portugal into its portfolio represents a compelling strategic opportunity. Industry estimates and company statements highlight that TAP’s primary appeal lies in its Lisbon hub. Geographically positioned on the western edge of Europe, Lisbon serves as a natural and highly efficient gateway for transatlantic flights.
TAP has spent its 81-year history building a robust network that connects Europe to key markets in South America, particularly Brazil, as well as various Portuguese-speaking nations in Africa. These routes are highly lucrative and difficult for competitors to replicate from more northern European hubs like Paris-Charles de Gaulle or Amsterdam-Schiphol.
In an official company statement released alongside the bid, Air France-KLM Chief Executive Officer Benjamin Smith emphasized the cultural and operational value of the Portuguese carrier.
“We value what TAP has built over the last 81 years: a strong Lisbon hub, a strong brand, and a unique value proposition that provides connectivity and pride to millions of Portuguese people.”
Synergies and Network Expansion
The Franco-Dutch group has outlined a vision where TAP would benefit from seamless integration into its global commercial network. This would include close collaboration with Air France, KLM, and Transavia, as well as transatlantic joint venture partners Delta Air Lines and Virgin Atlantic.
Air France-KLM has already demonstrated a strong commitment to the Portuguese market. According to the company’s official release, for the summer 2026 season, the group increased its capacity in Portugal by 11%, offering up to 346 weekly frequencies across 29 routes. By bringing TAP into the fold, Air France-KLM aims to maximize economic and operational synergies while maintaining the airline’s distinct Portuguese identity.
“Our ambition is to strengthen the operations at Lisbon while developing connectivity in other cities across the country including Porto.”
Competition Among European Airline Giants
A Three-Way Contest for Consolidation
While Air France-KLM is the first to officially submit a non-binding offer, it is unlikely to be the last. The deadline for this second round of offers is set for April 2, 2026, and the Portuguese government aims to reach a final decision by the summer.
The privatization of TAP has drawn intense interest from other major European players. International Airlines Group (IAG), the parent company of British Airways and Iberia, and the Lufthansa Group have both previously signaled their intent to participate in the process. IAG already dominates the Latin American market through its Madrid hub, while Lufthansa recently expanded its southern European presence by acquiring a stake in Italy’s ITA Airways.
The competition highlights a broader trend of consolidation within the European aviation sector, as legacy carriers seek to absorb smaller national airlines to expand their networks and achieve economies of scale. Air France-KLM, which reported carrying 103 million passengers and generating €33 billion in revenue in 2025, possesses the financial resources required to mount a highly competitive bid.
AirPro News analysis
The formal bid by Air France-KLM for TAP Air Portugal represents a critical juncture in European aviation consolidation. We observe that the major airline groups are increasingly focused on securing strategic geographic hubs rather than simply acquiring aircraft or market share. Lisbon’s unique positioning makes it an irreplaceable asset for transatlantic traffic, particularly to South America.
If Air France-KLM successfully acquires the 44.9% stake, it will effectively block its primary rivals, IAG and Lufthansa, from monopolizing the Southern European and Latin American corridors. However, any consolidation in the European aviation market typically undergoes thorough regulatory review by the European Commission to ensure market competition is maintained. Furthermore, the Portuguese government’s insistence on maintaining a 50.1% majority stake in the short term means that any strategic partner will need to navigate complex state-shareholder dynamics and guarantee the preservation of TAP’s national identity and workforce.
Frequently Asked Questions (FAQ)
What is Air France-KLM proposing?
Air France-KLM has submitted a non-binding offer to acquire a minority stake in TAP Air Portugal as part of the airline’s privatization process.
How much of TAP Air Portugal is up for sale?
The Portuguese government is currently offering a 44.9% stake to private investors, with an additional 5% reserved for TAP employees. The state will retain a 50.1% majority stake for now.
Why is TAP Air Portugal considered a valuable asset?
TAP operates a highly strategic hub in Lisbon, offering extensive and lucrative flight connections to South America (especially Brazil) and Africa, which are difficult to replicate from northern European airports.
Who else is interested in buying TAP?
Other major European airline groups, including IAG (owner of British Airways and Iberia) and the Lufthansa Group, have expressed strong interest in acquiring a stake in the Portuguese flag carrier.
When will a decision be made?
The deadline for the current round of non-binding offers is April 2, 2026, and the Portuguese government expects to make a decision by the summer of 2026.
Sources
Photo Credit: TAP Air Portugal
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