Is Southwest Warming to the Idea of Baggage Fees?

On a routine earnings conference call for financial reporters last week, Gary Kelly, CEO of Southwest Airlines, was asked if Southwest might start charging baggage fees. Followers of cop and lawyer shows on TV know that sort of question is called a "hypothetical," and Kelly answered it the way most people answer hypotheticals: We're not planning it now, but we might in the future.

Kelly's exact words: If customers want "an a la carte approach ... we'd be crazy not to provide our customers with what they want."

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Decades ago, my old high school buddy Larry used to reply to hypotheticals by saying, "It's not altogether inconceivable," and Kelly might well have used that one instead. Folks use answers like that to maintain maximum wiggle room and protect themselves against criticisms like, "But three years ago you said you'd never change your policy!"

The business and travel press picked up on that comment and has engaged in lots of speculation about it. As to what might actually happen, Kelly's earlier comments hold the key. In April, he stated that charging for bags would cost the airline $1 billion a year in lost customers. Clearly, at least for now, Southwest knows that its two-bags-free policy has traction in the marketplace and provides a net gain in revenues and profits. As long as the bag policy retains traction in the marketplace and remains important to the airline's brand, Southwest will continue it.

The takeaway from all this is simple. Within the time frame of any trips you're currently planning, or tickets you're planning to buy, don't figure that you'll have to pay to check two bags on Southwest. Two to three years out, it's not altogether inconceivable that Southwest will start charging for bags. But as long as that baggage policy keeps steering you to Southwest's flights, the carrier will continue check bags on the house.

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