Southwest is hitting the pause button on blanket changes

Transcription:

Conway Gittens: I’m Conway Gittens, reporting from the New York Stock Exchange. Here’s what we’re watching today on TheStreet.

Fresh data released on Friday appeared to support the Federal Reserve’s September interest rate cut. The personal consumption expenditure index showed inflation rose 2.2 percent in August from a year ago, down from 2.5 percent in July. The move brought the Fed’s preferred measure of inflation even closer to its 2 percent target.

Related: Here’s where Southwest’s first red-eye flights will take place

In other news – there’s good news for those considering a Southwest Airlines flight. The company confirms that it will not start charging baggage fees. Right now, the airline allows passengers to check two bags at no cost, while most airlines charge at least $35 for the first bag. In the first six months of 2024 alone, airlines collected $3.7 billion in checked baggage fees, according to the Bureau of Transportation Statistics.

Southwest “believes that any change to the current policy … would reduce demand and far exceed any revenue gains created by the imposition and collection of baggage fees.”

The airline is also betting that by maintaining the “baggage-free” policy, fewer passengers will bring luggage onto the plane, making boarding smoother and faster.

That last point is important because Southwest also announced a delay in removing open seats. The airline said that assigned seating won’t officially begin until 2026, with ticket purchases starting in late 2025. Southwest admits that 80 percent of its customers and 86 percent of the flying public prefer assigned seats.

One reason for the delay has to do with Southwest’s other plan to introduce premium seating, which means plans have to be reconfigured — and that takes time.

Southwest management is under pressure to turn things around after a decline in revenue.

That will do for your daily briefing. From the New York Stock Exchange, this is Conway Gittens with TheStreet.

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