The Southwest Airlines jet will approach Midway Airport in Chicago on December 15th, 2023. (John J. Kim/Chicago Tribune/Tribune News Service
John J. Kim | Chicago Tribune | Getty Images
Southwest Airlines“New policies such as charging checked luggage could potentially be backfired for the first time, Fitch Rating said Thursday.
Southwest has reversed two decades-old “bag fly-free” policies for checked baggage in May, with exceptions for travelers who purchase Southwest credit cards, elite frequent flyer status, or top-class tickets.
It also launched basic economic fares for allotted seats and decorations, and states that flight credits will expire.
Fitch said: “Southwest has issued a long known negative valuation outlook for the company on its strong balance sheet as it could move towards non-conservative capital allocation and monetary policy.
“Items aimed at improving profitability, such as the introduction of bag fees and expiration of flight credits, run the risk of undermining Southwest’s competitiveness against peers,” Fitch said.
A social media post from Southwest elicited angry comments about the shift, even if it had nothing to do with policy changes, but said there was a loss of market share in cases of “uncertainty.”
Southwest declined to comment on Fitch’s new outlook. The airline has been under more pressure to improve its margins since activist hedge fund Elliott Investment Management acquired shares in its career and later won five boards in a settlement last year.
