Bags fly free*
I used to fly Southwest Airlines all the time. Not anymore.
Once upon a time, there was an airline called Southwest Airlines, and it was different. Its employees seemed happier than those at other airlines, and its policies stood out.
In turn, its passengers appreciated the package, and they became loyal customers.
Now, it's all going away, as Southwest announced this week that it's getting rid of the latest and maybe last big thing that set it apart from other large carriers in the United States:
Bags fly free.*
We'll have to put an asterisk after that phrase from now on, even though it's literally a registered trademark of Southwest Airlines.
Because starting with tickets purchased on or after May 28, Southwest is doing away with the two checked bags for free policy for many of its passengers, which is the latest iteration of something the airline has apparently offered since its origins more than half a century ago.
Here's the new policy:
Passengers who have the highest level of Southwest's frequent flyer program or who travel on the most expensive tickets, still get two bags included.
Passengers at a lower level of frequent flyer membership "and other select customers," get one checked bag.
But for everybody else who flies Southwest, free checked bags will be a thing of the past.
What's behind the change? Well, if you knew nothing else you could probably deconstruct the whole thing from the headline Southwest posted on its Investor Relations site:
SOUTHWEST AIRLINES OUTLINES CHANGES TO DRIVE REVENUE GROWTH AND REWARD ITS MOST LOYAL CUSTOMERS
The first eight words tell the tale: It's all about revenue growth, which is in turn the result of Southwest's efforts to improve its top line after a bruising battle with an activist shareholder, Elliott Investment Management.
To be clear: Southwest isn't unprofitable; it's just not profitable enough by some investors' measure.
Anyway, this isn't a new story; it's just a new example.
Years ago, one of the strategies that set Southwest Airlines apart -- and that led to decisions like open seating (also going away) and bags-fly-free -- was that it ranked its stakeholders differently from many other companies.
The late Southwest co-founder and CEO Herb Kelleher put it bluntly:
Employees first.
Customers second.
Investors third.
The idea was that happy employees lead to a better passenger experience, which leads to higher share prices.
Now, it's inverted: Investors get more revenue; customers get less (or maybe the same as what they were getting before, only now labeled as a perk for the preferred). I’m not sure where employees fit into the scheme.
I asked Southwest Airlines for further comment on the change, and what they think about my theory that they've inverted their stakeholders.
They pointed me to a statement from Southwest CEO and President Bob Jordan, which is included in the original announcement:
"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.
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."
I'm not cynical. I hope it works out well for Southwest.
For the record, I'm still a customer -- or at least a potential one, but for the fact that Southwest doesn't fly out of my home airport anymore.
And maybe that's why this story hits me like it does.
That whole statement about "Customers" and "Shareholders" and "People" (their capitalization) sounds like could have come from the CEO of almost any airline.
Once upon a time, I don't think we'd have been as likely to say that.
7 other things worth knowing today
President Trump hosted an exclusive 30-minute car show at the White House on Tuesday afternoon. The only company represented: Tesla. The only purpose: helping Elon Musk. It was an extraordinary scene of a president using the backdrop of the White House to boost sales for a friend and top donor, made all the more surreal because Mr. Trump has for years bashed electric vehicles. On Christmas Day in 2023, he posted on social media that electric cars should “ROT IN HELL.” (The New York Times)
A New Zealand study determined that the body that runs the country’s entire $16 billion public health system was trying to organize its finances using a single Excel spreadsheet. This became apparent after the organization promised lawmakers it had a sufficient budget, but then blew through its allocation and triggered an audit. (The Register)
A judge on Wednesday is expected to scrutinize the constitutional issues at play in the case of Mahmoud Khalil, a recent Columbia University graduate and permanent legal resident who was arrested over the weekend and taken to a Louisiana detention center. Mr. Khalil has not been accused of any crime and his swift arrest and transfer have raised alarms about free speech protections as President Trump promises to crack down on protests at colleges. (The New York Times)
Donald Trump’s original TV series “The Apprentice,” is now streaming on Amazon Prime. The series, which ran 7 seasons, has not streamed since it went off the air. It’s considered one of the key reasons Trump was able to make himself famous to a wide audience who then elected him in 2016. (Showbiz 411)
The Oscar-winning movie that pets can’t stop watching: “Flow,” a dialogue-free animated Latvian film made with open-source software, is keeping our domesticated friends riveted. (The New York Times)
Utah is set to place a ban on fluoride in public drinking water. The bill, HB81, awaits Governor Spencer Cox’s signature, setting a precedent as the first state to put the ban in place. (Fox News)
These are the 10 happiest cities in America, according to new research, and all three of the top winners are in California. (Fortune)
Thanks for reading. Photo by Charlie Wollborg on Unsplash. I wrote about some of this before at Inc.com. See you in the comments!
Another example of PE firms trying to squeeze companies and consumers for short term gains and having no accountability for the long term growth of companies that they work with. Might be a great article/book on all of the examples of how unregulated PE is destroying companies for their short term gains - and doing nothing to create value for consumers or the community as a whole. So many examples of them destroying value - this is just the latest example of them destroying a brand that took decades to build. I can see the business book "The Death of an Iconic Southwest Airline" in about 10 years. Sucks to watch happen in real time.
Rep. Jim McGovern speaking in the house (unedited):
The gentle lady was talking about what was said in the rules committee meeting last night. I want to take a couple of minutes to talk about how people voted in the rules committee last night. We gave republicans a chance last night.
The committee said if they really don’t believe that this budget cuts funding for school meals, if they really believe what they’re saying, then they can vote to assure the American people that they’re not going steal school meals from kids in order to give tax breaks for millionaires. Every Republican voted no, every single one of them.
Then Democrats offered to protect Medicaid and Medicare. Medicaid as you know covers 41% of all births in the United States, nearly half of children with special healthcare needs and 5 in 8 nursing home residents. We asked them not to cut Medicaid in order to fund tax breaks for billionaires. Every Republican vote voted no.
Then Democrats offered an amendment to extend the tax cuts for people making under $400,000 while ensuring that corporations and billionaires pay their fair share. We asked Republicans to continue tax cuts for only those who needed the most because those are the tax cuts they let expire while their tax cards for greedy corporations were made permanent. We asked them to prioritize working families over greedy corporations. Every Republican voted no.
Then, Democrats offered an amendment preventing tax giveaways for people earning over $1 million a year. Every republican voted no. We wanted to see if there was anyone so rich that Republicans don’t think they deserve a tax giveaway, so we asked them to vote against tax rates for earning over $100 million per year. We asked them to side with factory workers and firefighters over hedge fund managers and billionaire bankers. Every republican voted no.
We even offered an amendment preventing tax cuts for people with a net worth of over - getting this - $1 billion. Every Republican voted no. They betrayed their constituents. They voted to steal from the American people in order to protect tax breaks for billionaires. Again, this is about whose side you are on. Republican showed us last night with their votes whose side they are on, and it’s not the working people this country.
I reserve my time.