Southwest expects it’ll rake in $350 million from bag fees this year as its stock tanks on second-quarter earnings
Just 10 months ago, Southwest Airlines said that adding bag fees would drive down customer demand for plane tickets to a degree that would “far outweigh any revenue gains.” Now, it’s now feeling pretty good about them.
On its Thursday earnings call, Southwest said it expects to make more than $350 million from bag fees for the full year.
Southwest says the fees are tracking at $1 billion, annualized. That would put the carrier at the bottom of the big four airlines’ baggage revenue by 2024 figures, and is at the lower end of its own bag revenue estimate from last September — when it was still calling bag fees “value destructive.”
According to Southwest, the addition of the fees hasn’t caused a significant customer impact. Southwest is checking about a third fewer bags than it was before implementing fees, according to CEO Bob Jordan, and “checking more bags per passenger than expected.”
Southwest shares plunged 12% on Thursday, following its earnings report on Wednesday afternoon that came in below expectations.
Southwest says the fees are tracking at $1 billion, annualized. That would put the carrier at the bottom of the big four airlines’ baggage revenue by 2024 figures, and is at the lower end of its own bag revenue estimate from last September — when it was still calling bag fees “value destructive.”
According to Southwest, the addition of the fees hasn’t caused a significant customer impact. Southwest is checking about a third fewer bags than it was before implementing fees, according to CEO Bob Jordan, and “checking more bags per passenger than expected.”
Southwest shares plunged 12% on Thursday, following its earnings report on Wednesday afternoon that came in below expectations.
