Southwest Airlines Announces Major Changes to Fare Structure and Loyalty Program

Southwest will introduce baggage fees, a ‘Basic’ fare, and new Rapid Rewards policies as part of a strategy to boost revenue and attract more customers.

A Southwest Airlines traveler checks a bag at Midway International Airport in Chicago on March 11, 2025. Erin HooleyAP Photo

Southwest Airlines is making significant changes to its fare structure and loyalty program as part of a broader strategy to increase revenue and reward frequent travelers. The Dallas-based airline announced the changes on March 11, stating that the new policies will take effect for flights booked on or after May 28.

Among the most notable changes, Southwest will begin charging baggage fees for most travelers for the first time in its history.

The airline, which has long promoted its “Bags Fly Free” policy, will now limit free checked bags to Rapid Rewards A-List Preferred Members and Business Select fare customers, who will retain two free checked bags.

A-List Members and select customers will continue to receive one free checked bag, while Southwest Rapid Rewards credit card holders will be credited for one checked bag. Other customers will be charged fees for their first and second checked bags, with weight and size limitations still applying, according to the company’s announcement.

Southwest is also revising how Rapid Rewards points are earned and redeemed. Business Select fares will now earn more points, while Wanna Get Away and Wanna Get Away Plus fares will earn fewer points than before.

In addition, Southwest will implement a variable redemption rate for its loyalty program, meaning that the number of points required for a flight will fluctuate based on demand.

The airline also plans to introduce a new “Basic” fare category aimed at budget-conscious travelers. While specific details have not been disclosed, the airline has stated that this fare tier will provide a lower-cost option with fewer benefits, aligning with a broader industry trend of offering ultra-low-cost fares.

This move is part of Southwest’s transition toward an assigned seating model, which it announced last year following extensive customer research indicating that a majority of travelers prefer seat assignments.

Southwest’s leadership has framed these changes as a necessary step to enhance revenue and improve its financial performance while maintaining customer satisfaction.

“We have tremendous opportunity to meet current and future customer needs, attract new customer segments we don’t compete for today, and return to the levels of profitability that both we and our shareholders expect,” said Bob Jordan, Southwest’s president and CEO. “We will do all this while remaining focused on what’s made us strong—our people and the authentic, friendly, and award-winning customer service only they can provide.”

The airline has been implementing multiple revenue-generating initiatives over the past year, including partnerships with Icelandair, the launch of overnight redeye flights, and expanding ticket sales through online travel agencies such as Expedia.

Southwest also recently announced a reduction of approximately 1,750 corporate and leadership roles, which it said would save the company an estimated $210 million in 2025 and $300 million annually starting in 2026.

Another key policy change involves the expiration of flight credits. Beginning May 28, flight credits issued for most fare types will expire one year from the ticketing date. However, credits issued for the new Basic fare will expire after six months, making it a more restrictive option.