Fears that Southwest will come after two bag policy mount

For the decades that followed its launch out of San Antonio in 1966, Southwest Airlines (LUV) became known for a sort of things which would per chance be lower than no circumstances common on other airlines.

The principle one, a seating policy wherein passengers board consistent with envision-in time and fare class after which make a selection from any on hand seat, became the victim of cost-cutting measures that chief executive Bob Jordan said are necessary amid a sort of unprofitable quarters and a revenue drop of 46% to $367 million within the 2d quarter.

Related: Southwest Airlines eventually makes the seating change many feared

Over the month that followed, investment company Elliott Investment Management has been buying up Southwest shares but also amplifying its efforts to oust Jordan and board chairman Gary Kelly over what they claim is "poor execution and leadership's stubborn unwillingness to adapt the company's strategy."

Many individuals think Southwest will soon back far from 'bags fly free'

It has now acquired enough shares — 10% — to call for a different shareholder meeting and a potential vote on Jordan and Kelly's removal.

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Between Elliott's push for drastic cost-cutting, the new changes to the seating policy and the actual fact that Southwest recently sent out a survey asking some members of its loyalty program about their "bags fly free" rule led many to invest that the latter would used to be the following austerity victim. The policy, which lets in travelers of any fare class to envision two bags for gratis, is by far many of the most generous within the industry.

Southwest has denied the suggestion that it'd make immediate changes to its bag policy and said that it used to be merely taking a look to peer what customers "value."

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Southwest responds: 'No work currently underway to change our policy'

"There would per chance be no work currently underway to change our industry-leading two bags fly free policy, however or not it is way important for us to grasp what our customers value most," Southwest said in an announcement to news outlets. "We'll continue our efforts to trace stakeholder sentiment on many aspects of our business model to substantiate we remain competitive and current on customer preferences."

In a past earnings call, Jordan said that many "people make a selection Southwest Airlines because we don’t have bag fees" while Southwest also said it truly is going to "provide more important points on its comprehensive plan to deliver transformational commercial initiatives, improved operational efficiency and capital allocation discipline within the course of its Investor Day in late September."

The sent-out survey, nevertheless, asked "hypothetical" questions that led many to doubt the veracity of the denials. One asked respondents to weigh in on how they would feel if the cheapest Wanna Get Away fare included simplest a deepest item and a carry-on bag while the Wanna Get Away Plus fare included a free checked bag. The higher fare classes would continue to get two free checked bags.

Weight brought by everything from the design of the aircraft (Switzerland's flagship carrier Swiss is currently redesigning some of its planes after underestimating how heavy the top quality seats would be) and baggage brought onboard are a key financial consideration for airlines provided that it affects both fuel consumption and what number fare-paying customers would per chance be brought onboard.