This past week, Southwest Airlines ticked off many of its previous fans by axing one of the big perks the airline still had — free checked bags.

It was a total about-face for a company that, just months ago, touted the bags-fly-free policy as one of its most attractive assets. Yet the company was desperate on the heels of major layoffs and a stock price that lost half its value in recent years.

Why does any of this matter to Central Florida? Because Southwest carries more people in and out of Orlando International Airport than any other airline — by a significant wingspan.

In December alone, Southwest carried one out of every five passengers to and from MCO — more than 1 million passengers.  Delta came in a distant second with 677,000 passengers.

Basically, Orlando’s aviation scene is intrinsically tied to Southwest.

That used to be a good thing. In fact, my wife and I used to be Southwest superfans. We had the airline’s credit card, qualified for companion passes and flew the airline every chance we could.

Southwest’s deal used to be: We don’t offer many frills. But we promise to get you to your destination on-time and for a good price. That was a deal we were eager to accept.

But then, a few years ago, we started noticing an increase in flight delays. And that prices were going up. Southwest’s on-time track record slipped to below the industry average, dragging down OIA’s overall rate.

An airline that once billed itself as the most reliable and best-valued deal in American aviation no longer looked like either. Even as it remained the biggest piece of Orlando’s air-travel puzzle, serving as many resident’s top or only option for nonstop flights and the first and last thing many visitors experience as part of an Orlando vacation.

At Southwest Airlines, checked bags will no longer fly for free

Others noticed the changes as well. Ever since the airline’s disastrous Christmas meltdown in 2022, the headlines have been plentiful and painful. “Southwest Used to Be the Best-Run Airline. What Went Wrong,” wrote Barons, while the New York Times attempted to explain “How Southwest Airlines Lost Its Groove.”

Then came news this past week that Southwest was axing one of the best values the airline had left — free checked bags. Southwest CEO Bob Jordan described the change as part of a “tremendous opportunity.”

I’ve been enough cutbacks to become very wary of executives who start talking about exciting “opportunities.” It often means businesses start charging customers more or offering them less trying to score short-term gains that end up doing long-term damage. We see it with cable and cell-phone companies that often send customers looking for other options. I think the Sentinel’s investment-fund owners run the same risk with price hikes that may bring in short-term cash infusions at the expense of loyal customers.

One of the interesting things about Southwest is that it knows this latest move of taking away free checked bags will probably do long-term damage to the company — because its leaders have repeatedly said as much.

Just a few months ago, at the company’s investor-day event, executives touted the bags-fly-free policy as one of the key things that distinguished the airline, attracting customers and generating loyalty. CEO Jordan said the policy was the result of “extensive data-driven research” that showed it was “the right economic choice, driving sustained revenue through customer loyalty and repeat business.”

And VP Ryan Green told investors that “top-tier” researchers had concluded “there’s a very high awareness of our bags-fly-free policy … and it is one of the top criteria in why customers choose Southwest Airlines.”

Green even went so far to say that “customers may choose the competition if we change the policy,” concluding that “changing our bags policy would be value destructive.”

Flash forward to a few days ago when making that “value destructive” move was suddenly considered an “opportunity.”

The new baggage policy starts May 28 and still offers free checked bags to customers who are members of the airline’s higher loyalty tiers, hold Southwest credit cards or purchase business-class fares.

Investors liked the move. Southwest’s stock price jumped 8% the day it was announced. But investors aren’t always concerned with the five-, 10- or 20-year viability of a company. Some will enjoy the early cash boost provided by baggage fees and be long gone after loyal customers have started flying other airlines.

The good news for Southwest is that it has seen an uptick in on-time reliability of late, going from below the industry average in 2023 to slightly above average in 2024. And last month Southwest made industry eyes pop when it actually ranked No. 1 for on-time arrivals.

Again, all this matters greatly to OIA, which has posted some of the worst on-time records in the country with that rate heavily influenced by Southwest, which accounted for 12.5 million of the total 57 million passenger trips there last year. The airline also recently shifted the bulk of its international operations from Fort Lauderdale to Orlando.

Central Floridians should want the airline to succeed. But this community benefits from long-term growth way more than short-term stock boosts.

smaxwell@orlandosentinel.com

Orlando Airport (MCO) second-worst for delays in America | Commentary

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