That'll explain it. Hedge funds are one of the worst ideas we've had as a society. All they do is gobble up companies and run them into the ground for short term profit.
Southwest has been under increasing pressure to raise revenue and improve returns after activist hedge fund Elliott Investment Management took a stake in the airline last year and pushed for changes to the carrier’s business model.
That'll explain it. Hedge funds are one of the worst ideas we've had as a society. All they do is gobble up companies and run them into the ground for short term profit.
Hedge funds and Private Equity need to DIAF. I've long been outspoken about that, and 100% you're correct. Gobbling up the companies also decreases competition, making everything else worse.
Hedge funds and Private Equity need to DIAF. I've long been outspoken about that, and 100% you're correct.
Gobbling up the companies also decreases competition, making everything else worse.
All of these goofy ass financial Rube Goldberg Machines need to go. Allowing ownership in a company to be traded as a liquid asset to whoever wants a piece of the action sight unseen leads to all...
All of these goofy ass financial Rube Goldberg Machines need to go. Allowing ownership in a company to be traded as a liquid asset to whoever wants a piece of the action sight unseen leads to all kinds of perverse financial incentives that don't align with the long term success of the company and society as a whole.
It's hard to imagine a privately owned mom and pop shop operating with similar policies as most multinational corporations do nowadays, because the latter are mostly owned by people who have no clue what the company does, only own it for a couple of months, and in some cases are owned by people who actively want it to fail.
If the average person doesn't understand how the financial instrument works, why is it even legal to do? What overall good are we gaining by allowing the ownership of companies to fluctuate like that, and does it outweigh the downside?
I wish that we evaluated regulation and laws along those criteria in more cases.
I guess, then again, as a counter argument, Koch Industries still exists.
An extreme minority of hedge funds will ever want to take anything even close to controlling interest in a company. A large proportion of hedge funds don't even trade or invest in stocks at all. I...
An extreme minority of hedge funds will ever want to take anything even close to controlling interest in a company. A large proportion of hedge funds don't even trade or invest in stocks at all.
I think you meant to levy this complaint against private equity firms, which are different from activist hedge funds, which themselves are still a very particular and uncommon type of hedge fund.
And there's even more nuance there when you look at actual outcomes. God knows "Drive it into the ground" is a thing that happens, but it doesn't actually take private equity nor always happen...
And there's even more nuance there when you look at actual outcomes. God knows "Drive it into the ground" is a thing that happens, but it doesn't actually take private equity nor always happen with it.
It's not a particularly good way to make money, either. Rarely is the intention to "drive" a company to the ground. The whole idea with LBOs is that debt is cheaper than capital - but it isn't if...
It's not a particularly good way to make money, either. Rarely is the intention to "drive" a company to the ground. The whole idea with LBOs is that debt is cheaper than capital - but it isn't if the company ceases to exist.
While it's easy to point at hedge funds or private equity and their association with failing businesses, I wonder about the cause and effect relationship. I would think that a large longstanding...
While it's easy to point at hedge funds or private equity and their association with failing businesses, I wonder about the cause and effect relationship. I would think that a large longstanding business with good cashflow doesn't need hedge fund involvement. On the other hand, if a business's value is down 35% in the past 4 years while the industry average is roughly flat (like LUV vs. the entire airline stock category), maybe some changes in the business were inevitable whether influenced by a hedge fund or not. Southwest's margins have shrunk considerably in the past several years, going into the red for a stretch in 2024. It seems like they need to make some changes whether it affects their market share or not.
Sidenote: If 4 years sounds like an arbitrary number, it kind of is. I was originally going for 5 years as a "round" number, but I realized that that would be March 2020, which was an unusual time. This is just for an easy talking point though, if you look at the charts you can see that Southwest is not trending well in general.
I'd note that there's some conflation with terms. Most people are probably thinking of private equity. Hedge funds are like mutual funds, except that they're private and allowed to do riskier...
I'd note that there's some conflation with terms. Most people are probably thinking of private equity. Hedge funds are like mutual funds, except that they're private and allowed to do riskier and/or more sophisticated financial movements (for example, going long on a stock AND going short on a stock, thereby "hedging" - hedge fund).
Elliott Investment Management, the hedge fund in question, owns about 10% of Southwest. They do not own Southwest. They unilaterally cannot tell Southwest to do anything. Of course, as a fairly large investor, they can be loud at investor meetings, and try to get other shareholders to get mad with them, and if enough of them get mad then they may have enough votes to do something.
It's a very different situation than private equity, which often takes companies private - that is, they buyout all of the public shares, and completely own the company. At which point they really can do whatever they want.
I'd also note that hedge funds being "activist investors" is not all that common. Hedge funds often aren't long on a specific stock for long periods of time to begin with, so they don't really care about management.
Seems like that's exactly what they're doing, having purportedly riled up some investors and demanded the ousting of the CEO. I think in people's minds, that's functionally similar enough to the...
they can be loud at investor meetings, and try to get other shareholders to get mad with them, and if enough of them get mad then they may have enough votes to do something
Seems like that's exactly what they're doing, having purportedly riled up some investors and demanded the ousting of the CEO. I think in people's minds, that's functionally similar enough to the PE dynamic, where the most prominent investor is seen as responsible for unpopular changes in the company. Of course, it's hard to say whether that is the case in this situation, since as you say, they do not have a controlling stake in Southwest.
What once was one of the best, cheapest, and most consumer-friendly airlines to fly is now becoming one of the regular guys and removing so many things that made them great, from charging for...
What once was one of the best, cheapest, and most consumer-friendly airlines to fly is now becoming one of the regular guys and removing so many things that made them great, from charging for checked bags, to new ticket tiers with expiring flight credits. It looks like they will also be reducing their carry-on bag sizes as well, to accommodate for fewer people checking bags.
Reuters has another article with information, including that they just had layoffs as well, and that their shareholders are upset at a 2% earnings increase instead of 10% 🙄.
As someone who flies southwest because it's one of the few airlines that's super cheap between two very important-to-me airports, this is a huge blow. I'm hoping that others will also raise hell and let them know their new policies suck.
Absolutely, Southwest has been my go to airline for years. Now I'm going to start looking at other airlines if they aren't going to differentiate themselves.
Absolutely, Southwest has been my go to airline for years. Now I'm going to start looking at other airlines if they aren't going to differentiate themselves.
Agreed. The only other airline I personally purchase tickets from is United, but that's because they have direct flights to another place I want to go once a year, where Southwest had layovers...
Agreed. The only other airline I personally purchase tickets from is United, but that's because they have direct flights to another place I want to go once a year, where Southwest had layovers that made no sense.
It looks like their hope is to also drive sign-ups for their $70/year credit card.
In fairness, carry-on bags had gotten unreasonably huge when I last flew circa 2015. It went from "what I need for flight and day 1" to "I'm packing all 7 days in this to save on baggage fees." So...
It looks like they will also be reducing their carry-on bag sizes as well, to accommodate for fewer people checking bags.
In fairness, carry-on bags had gotten unreasonably huge when I last flew circa 2015. It went from "what I need for flight and day 1" to "I'm packing all 7 days in this to save on baggage fees." So all bags scaled to the absolute maximum permitted instead of what you'd actually want to carry..
I place 99% of the blame on the airlines. Let's just fix it now: The jet fuel surcharge. You stand on a big scale with all your luggage and you get billed per kg. I'm sure a nice calculation could be made and it could be folded nicely into a carbon tax.
Carryons can now be reasonably sized. It doesn't matter how many bags you check so long as you're not filling them with lead.
Will concur that some of the stuff I’ve seen people bring aboard as carry-ons in the past few years has been rather absurd, to the point that I’m shocked that the staff allowed it and didn’t make...
Will concur that some of the stuff I’ve seen people bring aboard as carry-ons in the past few years has been rather absurd, to the point that I’m shocked that the staff allowed it and didn’t make them check it in.
It’s a bit mystifying. I usually carry a midsize backpack (fits under seat) and/or smaller-leaning midsize rolling luggage depending on the trip and have been looking for opportunities to trim that down.
Billing by weight for luggage seems fair, but why include the weight of the person too? At 190cm, plane travel is already miserable for me. Charging me extra for something I have no control over...
Billing by weight for luggage seems fair, but why include the weight of the person too? At 190cm, plane travel is already miserable for me. Charging me extra for something I have no control over is adding injury to insult.
For what it's worth the changes make me slightly more likely to fly them. Before, it was unquestionably "no", because I can't stand the non-assigned seats, and the two checked bags is typically...
For what it's worth the changes make me slightly more likely to fly them. Before, it was unquestionably "no", because I can't stand the non-assigned seats, and the two checked bags is typically not very useful for me, since I prefer to travel light, especially when I'm taking cheap flights.
Now, it'll be in contention. If it's the cheapest option on google flights, I may as well take them.
Just because the two checked bags are paid for now doesn't mean their tickets will be any cheaper. It just means that everyone who will check their bags will have to pay more. I'm ambivalent on...
Just because the two checked bags are paid for now doesn't mean their tickets will be any cheaper. It just means that everyone who will check their bags will have to pay more. I'm ambivalent on the open seating policy, though I have to say Southwest has always been the fastest to get on the plane and take off.
It doesn't mean it will be cheaper, but they do have competition, so what are they going to be competing on? The 'free' checked bags was a value-add to some people who didn't see it as being...
It doesn't mean it will be cheaper, but they do have competition, so what are they going to be competing on? The 'free' checked bags was a value-add to some people who didn't see it as being priced into the ticket cost, probably not a significant influence on selling a ticket to a potential customer but maybe for some it was, especially people who were checking bags. If they don't lower the pricing to account for the loss of 'free' checked bags, they're potentially losing those customers who check bags. Even if they lower the price of the tickets, the cost of checking the bags now most likely would end up making ticket prices higher than they were before when they were including checked bags because those people were being subsidized before by people who weren't checking bags.
The seating as far as value to customers goes might be a wash, hard to say, I don't think I'd like open seating but I would have to weigh that against how much I have to pay to get my preferred seat in assigned seating options.
Southwest was banking a lot on the goodwill they built up over the years with their "passenger first" policies, even if we were all subsidizing people's checked bags, that's fine, because we're...
Southwest was banking a lot on the goodwill they built up over the years with their "passenger first" policies, even if we were all subsidizing people's checked bags, that's fine, because we're all carrying on way too much anyway with two bags, and large ones at that, and often, suitcases.
For me, that was one of the best parts. As a solo traveler, even if I was one of the last people on the plane, I could consistently snag an open seat in the first 3-5 rows and be one of the first...
because I can't stand the non-assigned seats
For me, that was one of the best parts. As a solo traveler, even if I was one of the last people on the plane, I could consistently snag an open seat in the first 3-5 rows and be one of the first off the plane (I hate standing around at the end when I just want to get out of that cramped cabin but I'm stuck for 15+ minutes behind everyone pulling bags out of the overhead bins). I would be sitting next to randos regardless of what airline I took, but on Southwest, I could sit up front for no extra charge and have some control over what randos I sat next to. (And as a woman, having a choice over who I spend several hours in cramped quarters with means a lot to me!)
Now, if I was flying with someone I could not sit apart from (young kids, elderly relatives), I wouldn't take Southwest. But in all other scenarios, Southwest was the best choice for me, hands down. Even if they were $50 more than the cheapest option (after considering the cost of checked bags, because I always checked mine on Southwest), I would still go with them for that modicum of control and front-row access.
It's going to be a lot harder to justify flying Southwest anymore.
We must fly from very different airports. The last Southwest flight (Boston) I took, there were so many preboarders that by the time I got on the plane with B7, I was 2/3 to the back of the plane...
We must fly from very different airports. The last Southwest flight (Boston) I took, there were so many preboarders that by the time I got on the plane with B7, I was 2/3 to the back of the plane before I found an aisle or window seat. I passed by many rows where people were "saving" a seat. One person saved two seats. Southwest's policy was that they wouldn't intervene in that situation and to figure it out yourself.
My front rows are now always full with families or people saving seats and the best I can get, even if A30, would be a middle seat around the 6th or 7th row. I live near a SW hub though and my experiences match yours pre-COVID. It's only the last few years that any sense of decorum on SW has been dropped.
Edit: removed an unimportant portion that I don't feel the desire to litigate. Also changed halfway to the back to 2/3 after finding my texts at the time.
I am in the same boat (plane?). Southwest was an easy way to make quick trips to see family out of state. Doubtful we'll be using them going forward, even though we had direct flights from our...
As someone who flies southwest because it's one of the few airlines that's super cheap between two very important-to-me airports, this is a huge blow.
I am in the same boat (plane?). Southwest was an easy way to make quick trips to see family out of state. Doubtful we'll be using them going forward, even though we had direct flights from our city to the destination.
And in all honesty, it probably means we'll just travel to visit less, which was probably inevitable due to increasing costs across the board for airline flights, but this will speed that along.
I guess the goal is “make everything worse so people get our credit card to get some of it back” They’re also devaluing their points and making redemptions “dynamically priced”. Sad day. There’s...
I guess the goal is “make everything worse so people get our credit card to get some of it back”
They’re also devaluing their points and making redemptions “dynamically priced”.
Sad day. There’s no reason to pick Southwest over any other airline now.
I've already seen several calls to boycott and cancel the southwest CC on a few discord servers I'm in, Threads, Instagram, and Bluesky. I'm hoping that more and more people start calling this...
I've already seen several calls to boycott and cancel the southwest CC on a few discord servers I'm in, Threads, Instagram, and Bluesky. I'm hoping that more and more people start calling this out. Too bad we don't have Buttigeg in anymore. I'm sure he would investigate this.
I believe everything they're doing is something their competitors already do? It seems like there are regulations that would help to make air travel somewhat more pleasant, but they would make...
I believe everything they're doing is something their competitors already do?
It seems like there are regulations that would help to make air travel somewhat more pleasant, but they would make more sense as something every airline has to do.
And if their answer was "It appears consumers don't care enough to justify the compromises"... I don't like any of this either, but there's very little any government employee can, or should, be...
And if their answer was "It appears consumers don't care enough to justify the compromises"...
I don't like any of this either, but there's very little any government employee can, or should, be able to do about this.
Unlike others here I've never liked Southwest and that's as a former Texan that lived in the same city as their headquarters at Love Field. Their seating setup sucks, the race to check-in to not...
Unlike others here I've never liked Southwest and that's as a former Texan that lived in the same city as their headquarters at Love Field. Their seating setup sucks, the race to check-in to not get a shit seat sucks, exclusive use of shitty Boeing jets sucks, yadda-yadda-yadda, and not any cheaper than any other flight.
I am flying Southwest next week when I go back to Texas, but that's only because I have stuff I'm bringing to family members and get the two checked bags for "free" (ticket price is higher than another airline where I would normally have no checked bags) which are also old suitcases I'm not brining back with me. If I was flying after these policies kicked in, I'd just choose another airline like I usually do. Not that these private equity vultures give two shits about my once-in-a-blue-moon flight with them, but sure as hell means the next time I need to fly somewhere where Southwest also goes, it won't be on Southwest. Congrats on getting rid of the only thing that made you appealing, but I'm sure you'll make millions as short term profits make the stock go up and you sell off your share right before it all comes crashing down.
Boeing jets aside, it sounds they "fixed" (although, other people are complaining about the fixes) the issues you had.
Their seating setup sucks, the race to check-in to not get a shit seat sucks, exclusive use of shitty Boeing jets sucks, yadda-yadda-yadda, and not any cheaper than any other flight.
Boeing jets aside, it sounds they "fixed" (although, other people are complaining about the fixes) the issues you had.
Heard about that last year, but was under the impression that uproar had them reverse that decision because apparently some people like to fight for a seat?
Heard about that last year, but was under the impression that uproar had them reverse that decision because apparently some people like to fight for a seat?
That's probably just on me then. Some of the friend group fly Southwest constantly, so I remember them talking about it, but didn't pay much attention as my history shows I fly with them about...
That's probably just on me then. Some of the friend group fly Southwest constantly, so I remember them talking about it, but didn't pay much attention as my history shows I fly with them about once every 5 years.
Interestingly I never really understood where the "cheaper" thing came from unless one is flying with a lot of luggage. I always thought Southwest was fine and I'd check it when shopping for...
Interestingly I never really understood where the "cheaper" thing came from unless one is flying with a lot of luggage. I always thought Southwest was fine and I'd check it when shopping for flights. But rarely did it win out unless I had to carry a lot of stuff.
It did enable me to move from Washington state to Colorado cheap. A ticket and two 50lb plastic tubs of my possessions
Cheaper in the sense that checked bags were included and their prices were generally in the same range as other airlines without checked bags (or the price was comparable if you were checking a...
Cheaper in the sense that checked bags were included and their prices were generally in the same range as other airlines without checked bags (or the price was comparable if you were checking a bag), except Southwest's other aspects are all Spirit/Frontier level budget airline aspects.
There was a time, like as late as 5-10yrs ago, where Southwest, at least at my then home airport, MCI (Kansas City), was almost always the cheapest option when compared to the legacy airlines,...
There was a time, like as late as 5-10yrs ago, where Southwest, at least at my then home airport, MCI (Kansas City), was almost always the cheapest option when compared to the legacy airlines, even if bags are taken out of the equation. And the flights were typically non-stop.
But in the last 5yrs or so, the price difference between Southwest and Delta (the other airline I fly), isn't always that great. Sure, Delta charges for bags, but I opened a credit card so I always get one free bag. Even with the annual fee, I've still been able to come out ahead.
The only saving grace that Southwest still has, for me at least, is that I live really close to DCA versus IAD. But I'm not opening up a Southwest credit card, either. So we'll see.
I suppose the "cheaper" is where you fly out of and fly into? Because they have consistently been the cheapest option by at least $50 each way for where I tend to fly. I also don't often check...
I suppose the "cheaper" is where you fly out of and fly into? Because they have consistently been the cheapest option by at least $50 each way for where I tend to fly.
I also don't often check bags, but when I do, it's because I'm traveling with costumes or gifts. They have also more often been the kindest airline and been the most accommodating of my disability.
I travel very light. I tried Frontier for the first time a couple of weeks ago and did fine with my smaller backpack. Ended up being $38 round trip SFO to PSP and I even got exit row seating one...
I travel very light. I tried Frontier for the first time a couple of weeks ago and did fine with my smaller backpack. Ended up being $38 round trip SFO to PSP and I even got exit row seating one way and window with an empty to my left the other. No frills but certainly the best deal I’ve had.
Personally... I don't take issue with the removal of "free checked bags" as you could also just look at the existing policy as "everyone pays for two checked bags, whether or not they use them."...
Personally... I don't take issue with the removal of "free checked bags" as you could also just look at the existing policy as "everyone pays for two checked bags, whether or not they use them." In an ideal world, ticket prices would go down further to reflect this, now that they won't be included.
I agree. I never understand these arguments. The checked bags were always included in the price and those who don’t check bags are subsidizing the cost of the bags for those who do check them. I...
I agree. I never understand these arguments. The checked bags were always included in the price and those who don’t check bags are subsidizing the cost of the bags for those who do check them.
I wish we had more policies in place that made people realize what the true cost of something is, an example I can think of is charging people for waste disposal for their home waste at the point of creation or close to it (not have it hidden in taxes or whatever).
I don't think that applies here. The stated goal of this move is to increase revenue, so everyone's fare has effectively jumped $70 (assuming they charge $35/bag which is typical of other...
I don't think that applies here. The stated goal of this move is to increase revenue, so everyone's fare has effectively jumped $70 (assuming they charge $35/bag which is typical of other airlines).
I don't usually check bags, so my complaints mostly revolve around how policies like this make the boarding process worse by encouraging everyone to bring carry-ons, which usually leads to the gate agents begging people to gate check bags (else the people in Basic Economy will have their bags gate-checked whether they like it or not). It also means they'll adopt stricter bag size standards (plus fees for oversized carry-ons!), and it'll just take more time to get everyone on the plane because people need to stow their bags.
Southwest has been known for their stellar on-time performance, and I have to think that its open seating and checked bag policies have at least partially contributed to this by making boarding faster and smoother than other airlines.
I'd be happier if it were the same price for a carry-on bag or a checked bag to get rid of an incentive to avoid checking a bag. Also, including one bag in the ticket price seems pretty reasonable...
I'd be happier if it were the same price for a carry-on bag or a checked bag to get rid of an incentive to avoid checking a bag.
Also, including one bag in the ticket price seems pretty reasonable default for price comparison? Customers who don't have a bag could get a discount.
Southwest recently sent me a survey to fill out. I was bored in class, so I decided to do it even though it was long. First they collected some basic demographic info that every survey needs. Then...
Southwest recently sent me a survey to fill out. I was bored in class, so I decided to do it even though it was long. First they collected some basic demographic info that every survey needs. Then it changed to inclusive vacation packages. These included the flight, lodging, and sometimes a car rental in one price. They would give me the details of five vacation packages and ask me to select which I was most likely to buy, how likely I was to buy it, and why. I had to go through that more than 10 times with different sets of packages.
I am definitely not the target audience for vacation packages. I travel on the cheap, and I am quite good at getting a lot for cheap. The packages ranged from $1700 to $3000 for a weekend or week trip (it wasn’t clear). If I had that much to spend on a vacation, I could get a multi week trip that visits multiple different cities. I also don’t like the generic party or relaxation vacation that people seem to like. So I picked the cheapest one, and said I was extremely unlikely to buy it because of price.
Anyway, it seems like southwest is trying to get into more all inclusive vacation packages.
They've taken some of the only redeeming factors of that airline and gotten rid of them. I used to fly Southwest a lot in college, but then direct flights became more important to me and so I...
They've taken some of the only redeeming factors of that airline and gotten rid of them. I used to fly Southwest a lot in college, but then direct flights became more important to me and so I switched to Delta where possible, and Breeze for niche areas. There isn't really a great reason to fly with SWA anymore unless you happen to live at a hub. I'm curious if customers will stay with them now that they'll nickel and dime you like every other airline, but also continue to provide mediocre service and flight experience.
That'll explain it. Hedge funds are one of the worst ideas we've had as a society. All they do is gobble up companies and run them into the ground for short term profit.
Hedge funds and Private Equity need to DIAF. I've long been outspoken about that, and 100% you're correct.
Gobbling up the companies also decreases competition, making everything else worse.
All of these goofy ass financial Rube Goldberg Machines need to go. Allowing ownership in a company to be traded as a liquid asset to whoever wants a piece of the action sight unseen leads to all kinds of perverse financial incentives that don't align with the long term success of the company and society as a whole.
It's hard to imagine a privately owned mom and pop shop operating with similar policies as most multinational corporations do nowadays, because the latter are mostly owned by people who have no clue what the company does, only own it for a couple of months, and in some cases are owned by people who actively want it to fail.
If the average person doesn't understand how the financial instrument works, why is it even legal to do? What overall good are we gaining by allowing the ownership of companies to fluctuate like that, and does it outweigh the downside?
I wish that we evaluated regulation and laws along those criteria in more cases.
I guess, then again, as a counter argument, Koch Industries still exists.
The only way it would make sense is to transition from sole owner to a cooperative, where your stake in ownership grows with your time at the company.
An extreme minority of hedge funds will ever want to take anything even close to controlling interest in a company. A large proportion of hedge funds don't even trade or invest in stocks at all.
I think you meant to levy this complaint against private equity firms, which are different from activist hedge funds, which themselves are still a very particular and uncommon type of hedge fund.
And there's even more nuance there when you look at actual outcomes. God knows "Drive it into the ground" is a thing that happens, but it doesn't actually take private equity nor always happen with it.
It's not a particularly good way to make money, either. Rarely is the intention to "drive" a company to the ground. The whole idea with LBOs is that debt is cheaper than capital - but it isn't if the company ceases to exist.
You’re absolutely correct. I conflated the two.
While it's easy to point at hedge funds or private equity and their association with failing businesses, I wonder about the cause and effect relationship. I would think that a large longstanding business with good cashflow doesn't need hedge fund involvement. On the other hand, if a business's value is down 35% in the past 4 years while the industry average is roughly flat (like LUV vs. the entire airline stock category), maybe some changes in the business were inevitable whether influenced by a hedge fund or not. Southwest's margins have shrunk considerably in the past several years, going into the red for a stretch in 2024. It seems like they need to make some changes whether it affects their market share or not.
Sidenote: If 4 years sounds like an arbitrary number, it kind of is. I was originally going for 5 years as a "round" number, but I realized that that would be March 2020, which was an unusual time. This is just for an easy talking point though, if you look at the charts you can see that Southwest is not trending well in general.
I'd note that there's some conflation with terms. Most people are probably thinking of private equity. Hedge funds are like mutual funds, except that they're private and allowed to do riskier and/or more sophisticated financial movements (for example, going long on a stock AND going short on a stock, thereby "hedging" - hedge fund).
Elliott Investment Management, the hedge fund in question, owns about 10% of Southwest. They do not own Southwest. They unilaterally cannot tell Southwest to do anything. Of course, as a fairly large investor, they can be loud at investor meetings, and try to get other shareholders to get mad with them, and if enough of them get mad then they may have enough votes to do something.
It's a very different situation than private equity, which often takes companies private - that is, they buyout all of the public shares, and completely own the company. At which point they really can do whatever they want.
I'd also note that hedge funds being "activist investors" is not all that common. Hedge funds often aren't long on a specific stock for long periods of time to begin with, so they don't really care about management.
Seems like that's exactly what they're doing, having purportedly riled up some investors and demanded the ousting of the CEO. I think in people's minds, that's functionally similar enough to the PE dynamic, where the most prominent investor is seen as responsible for unpopular changes in the company. Of course, it's hard to say whether that is the case in this situation, since as you say, they do not have a controlling stake in Southwest.
What once was one of the best, cheapest, and most consumer-friendly airlines to fly is now becoming one of the regular guys and removing so many things that made them great, from charging for checked bags, to new ticket tiers with expiring flight credits. It looks like they will also be reducing their carry-on bag sizes as well, to accommodate for fewer people checking bags.
Reuters has another article with information, including that they just had layoffs as well, and that their shareholders are upset at a 2% earnings increase instead of 10% 🙄.
As someone who flies southwest because it's one of the few airlines that's super cheap between two very important-to-me airports, this is a huge blow. I'm hoping that others will also raise hell and let them know their new policies suck.
Absolutely, Southwest has been my go to airline for years. Now I'm going to start looking at other airlines if they aren't going to differentiate themselves.
Agreed. The only other airline I personally purchase tickets from is United, but that's because they have direct flights to another place I want to go once a year, where Southwest had layovers that made no sense.
It looks like their hope is to also drive sign-ups for their $70/year credit card.
In fairness, carry-on bags had gotten unreasonably huge when I last flew circa 2015. It went from "what I need for flight and day 1" to "I'm packing all 7 days in this to save on baggage fees." So all bags scaled to the absolute maximum permitted instead of what you'd actually want to carry..
I place 99% of the blame on the airlines. Let's just fix it now: The jet fuel surcharge. You stand on a big scale with all your luggage and you get billed per kg. I'm sure a nice calculation could be made and it could be folded nicely into a carbon tax.
Carryons can now be reasonably sized. It doesn't matter how many bags you check so long as you're not filling them with lead.
Will concur that some of the stuff I’ve seen people bring aboard as carry-ons in the past few years has been rather absurd, to the point that I’m shocked that the staff allowed it and didn’t make them check it in.
It’s a bit mystifying. I usually carry a midsize backpack (fits under seat) and/or smaller-leaning midsize rolling luggage depending on the trip and have been looking for opportunities to trim that down.
Billing by weight for luggage seems fair, but why include the weight of the person too? At 190cm, plane travel is already miserable for me. Charging me extra for something I have no control over is adding injury to insult.
Carry On by Seanan McGuire
This has come up here before. It would be horrid.
For what it's worth the changes make me slightly more likely to fly them. Before, it was unquestionably "no", because I can't stand the non-assigned seats, and the two checked bags is typically not very useful for me, since I prefer to travel light, especially when I'm taking cheap flights.
Now, it'll be in contention. If it's the cheapest option on google flights, I may as well take them.
So for me, these are good changes.
Just because the two checked bags are paid for now doesn't mean their tickets will be any cheaper. It just means that everyone who will check their bags will have to pay more. I'm ambivalent on the open seating policy, though I have to say Southwest has always been the fastest to get on the plane and take off.
It doesn't mean it will be cheaper, but they do have competition, so what are they going to be competing on? The 'free' checked bags was a value-add to some people who didn't see it as being priced into the ticket cost, probably not a significant influence on selling a ticket to a potential customer but maybe for some it was, especially people who were checking bags. If they don't lower the pricing to account for the loss of 'free' checked bags, they're potentially losing those customers who check bags. Even if they lower the price of the tickets, the cost of checking the bags now most likely would end up making ticket prices higher than they were before when they were including checked bags because those people were being subsidized before by people who weren't checking bags.
The seating as far as value to customers goes might be a wash, hard to say, I don't think I'd like open seating but I would have to weigh that against how much I have to pay to get my preferred seat in assigned seating options.
Southwest was banking a lot on the goodwill they built up over the years with their "passenger first" policies, even if we were all subsidizing people's checked bags, that's fine, because we're all carrying on way too much anyway with two bags, and large ones at that, and often, suitcases.
For me, that was one of the best parts. As a solo traveler, even if I was one of the last people on the plane, I could consistently snag an open seat in the first 3-5 rows and be one of the first off the plane (I hate standing around at the end when I just want to get out of that cramped cabin but I'm stuck for 15+ minutes behind everyone pulling bags out of the overhead bins). I would be sitting next to randos regardless of what airline I took, but on Southwest, I could sit up front for no extra charge and have some control over what randos I sat next to. (And as a woman, having a choice over who I spend several hours in cramped quarters with means a lot to me!)
Now, if I was flying with someone I could not sit apart from (young kids, elderly relatives), I wouldn't take Southwest. But in all other scenarios, Southwest was the best choice for me, hands down. Even if they were $50 more than the cheapest option (after considering the cost of checked bags, because I always checked mine on Southwest), I would still go with them for that modicum of control and front-row access.
It's going to be a lot harder to justify flying Southwest anymore.
We must fly from very different airports. The last Southwest flight (Boston) I took, there were so many preboarders that by the time I got on the plane with B7, I was 2/3 to the back of the plane before I found an aisle or window seat. I passed by many rows where people were "saving" a seat. One person saved two seats. Southwest's policy was that they wouldn't intervene in that situation and to figure it out yourself.
My front rows are now always full with families or people saving seats and the best I can get, even if A30, would be a middle seat around the 6th or 7th row. I live near a SW hub though and my experiences match yours pre-COVID. It's only the last few years that any sense of decorum on SW has been dropped.
Edit: removed an unimportant portion that I don't feel the desire to litigate. Also changed halfway to the back to 2/3 after finding my texts at the time.
When I read the comment, I assumed the op was fine with a middle seat based on my experience boarding southwest flights.
I am in the same boat (plane?). Southwest was an easy way to make quick trips to see family out of state. Doubtful we'll be using them going forward, even though we had direct flights from our city to the destination.
And in all honesty, it probably means we'll just travel to visit less, which was probably inevitable due to increasing costs across the board for airline flights, but this will speed that along.
I guess the goal is “make everything worse so people get our credit card to get some of it back”
They’re also devaluing their points and making redemptions “dynamically priced”.
Sad day. There’s no reason to pick Southwest over any other airline now.
I've already seen several calls to boycott and cancel the southwest CC on a few discord servers I'm in, Threads, Instagram, and Bluesky. I'm hoping that more and more people start calling this out. Too bad we don't have Buttigeg in anymore. I'm sure he would investigate this.
What would he investigate? Even if this is a bad change, a company is allowed to shoot itself in the foot if it wants to.
Sure, but it's a blatant anti-consumer practice. He made a point of making companies speak up for why they did things that were anti-consumer.
I believe everything they're doing is something their competitors already do?
It seems like there are regulations that would help to make air travel somewhat more pleasant, but they would make more sense as something every airline has to do.
Yes, but many of these policies are what made them stand out as worth it despite all of their negatives.
And if their answer was "It appears consumers don't care enough to justify the compromises"...
I don't like any of this either, but there's very little any government employee can, or should, be able to do about this.
Unlike others here I've never liked Southwest and that's as a former Texan that lived in the same city as their headquarters at Love Field. Their seating setup sucks, the race to check-in to not get a shit seat sucks, exclusive use of shitty Boeing jets sucks, yadda-yadda-yadda, and not any cheaper than any other flight.
I am flying Southwest next week when I go back to Texas, but that's only because I have stuff I'm bringing to family members and get the two checked bags for "free" (ticket price is higher than another airline where I would normally have no checked bags) which are also old suitcases I'm not brining back with me. If I was flying after these policies kicked in, I'd just choose another airline like I usually do. Not that these private equity vultures give two shits about my once-in-a-blue-moon flight with them, but sure as hell means the next time I need to fly somewhere where Southwest also goes, it won't be on Southwest. Congrats on getting rid of the only thing that made you appealing, but I'm sure you'll make millions as short term profits make the stock go up and you sell off your share right before it all comes crashing down.
Boeing jets aside, it sounds they "fixed" (although, other people are complaining about the fixes) the issues you had.
The new policy gets rid of the free checked bags, the rest of it doesn't change, so their only advantage is now gone.
They ended open seating as well.
Heard about that last year, but was under the impression that uproar had them reverse that decision because apparently some people like to fight for a seat?
I haven't seen anything about it being reversed, doesn't mean I didnt miss it but my search didn't show anything.
That's probably just on me then. Some of the friend group fly Southwest constantly, so I remember them talking about it, but didn't pay much attention as my history shows I fly with them about once every 5 years.
Interestingly I never really understood where the "cheaper" thing came from unless one is flying with a lot of luggage. I always thought Southwest was fine and I'd check it when shopping for flights. But rarely did it win out unless I had to carry a lot of stuff.
It did enable me to move from Washington state to Colorado cheap. A ticket and two 50lb plastic tubs of my possessions
Cheaper in the sense that checked bags were included and their prices were generally in the same range as other airlines without checked bags (or the price was comparable if you were checking a bag), except Southwest's other aspects are all Spirit/Frontier level budget airline aspects.
There was a time, like as late as 5-10yrs ago, where Southwest, at least at my then home airport, MCI (Kansas City), was almost always the cheapest option when compared to the legacy airlines, even if bags are taken out of the equation. And the flights were typically non-stop.
But in the last 5yrs or so, the price difference between Southwest and Delta (the other airline I fly), isn't always that great. Sure, Delta charges for bags, but I opened a credit card so I always get one free bag. Even with the annual fee, I've still been able to come out ahead.
The only saving grace that Southwest still has, for me at least, is that I live really close to DCA versus IAD. But I'm not opening up a Southwest credit card, either. So we'll see.
I suppose the "cheaper" is where you fly out of and fly into? Because they have consistently been the cheapest option by at least $50 each way for where I tend to fly.
I also don't often check bags, but when I do, it's because I'm traveling with costumes or gifts. They have also more often been the kindest airline and been the most accommodating of my disability.
I travel very light. I tried Frontier for the first time a couple of weeks ago and did fine with my smaller backpack. Ended up being $38 round trip SFO to PSP and I even got exit row seating one way and window with an empty to my left the other. No frills but certainly the best deal I’ve had.
Personally... I don't take issue with the removal of "free checked bags" as you could also just look at the existing policy as "everyone pays for two checked bags, whether or not they use them." In an ideal world, ticket prices would go down further to reflect this, now that they won't be included.
I won't hold my breath for that, though.
I agree. I never understand these arguments. The checked bags were always included in the price and those who don’t check bags are subsidizing the cost of the bags for those who do check them.
I wish we had more policies in place that made people realize what the true cost of something is, an example I can think of is charging people for waste disposal for their home waste at the point of creation or close to it (not have it hidden in taxes or whatever).
I don't think that applies here. The stated goal of this move is to increase revenue, so everyone's fare has effectively jumped $70 (assuming they charge $35/bag which is typical of other airlines).
I don't usually check bags, so my complaints mostly revolve around how policies like this make the boarding process worse by encouraging everyone to bring carry-ons, which usually leads to the gate agents begging people to gate check bags (else the people in Basic Economy will have their bags gate-checked whether they like it or not). It also means they'll adopt stricter bag size standards (plus fees for oversized carry-ons!), and it'll just take more time to get everyone on the plane because people need to stow their bags.
Southwest has been known for their stellar on-time performance, and I have to think that its open seating and checked bag policies have at least partially contributed to this by making boarding faster and smoother than other airlines.
I'd be happier if it were the same price for a carry-on bag or a checked bag to get rid of an incentive to avoid checking a bag.
Also, including one bag in the ticket price seems pretty reasonable default for price comparison? Customers who don't have a bag could get a discount.
Southwest recently sent me a survey to fill out. I was bored in class, so I decided to do it even though it was long. First they collected some basic demographic info that every survey needs. Then it changed to inclusive vacation packages. These included the flight, lodging, and sometimes a car rental in one price. They would give me the details of five vacation packages and ask me to select which I was most likely to buy, how likely I was to buy it, and why. I had to go through that more than 10 times with different sets of packages.
I am definitely not the target audience for vacation packages. I travel on the cheap, and I am quite good at getting a lot for cheap. The packages ranged from $1700 to $3000 for a weekend or week trip (it wasn’t clear). If I had that much to spend on a vacation, I could get a multi week trip that visits multiple different cities. I also don’t like the generic party or relaxation vacation that people seem to like. So I picked the cheapest one, and said I was extremely unlikely to buy it because of price.
Anyway, it seems like southwest is trying to get into more all inclusive vacation packages.
They've taken some of the only redeeming factors of that airline and gotten rid of them. I used to fly Southwest a lot in college, but then direct flights became more important to me and so I switched to Delta where possible, and Breeze for niche areas. There isn't really a great reason to fly with SWA anymore unless you happen to live at a hub. I'm curious if customers will stay with them now that they'll nickel and dime you like every other airline, but also continue to provide mediocre service and flight experience.