Some of Southwest's "Bags Fly Free" advertising.

If you are an airline geek or have a TV you probably have a good idea that bags fly free with Southwest Airlines. As airline after airline started to charge for bags, Southwest stuck to their guns with no fees. More recently they have started a large advertising campaign hoping that passengers are angry at the fees and will change airlines.

Although personally I do not like paying bag fees, I understand them; weight costs money. The heavier the plane, the most it costs to fly and for now, fees are generating a lot of money for airlines. Passengers will complain about them, but are they changing airlines?

Southwest is making the bet that additional fees will not work in the long run and they will make more revenue earning more passengers than they are losing by not charging bag fees.  It is a big bet, but if they lose, Southwest can always start charging bag fees.

In May 2010 Southwest completed a survey of 3900 business and leisure passengers where they could pick from 55 choices what aspect is most important to them when choosing an airline.  Here are the top five “needs” for business travelers:

1. Has good safety record
2. Offers non-stop flights where I want to go
3. Has convenient flight times
4. Provides good value
5. Does not charge fees

And the top five for leisure travelers:

1) Has good safety record
2) Provides good value
3) Does not charge fees
4) Offers non-stop flights where I want to go
5) Has sales on fares

The fact that charging fees made it on the top five for business travelers is surprising to me. Most business travelers do not have to worry about the fees, since their company will pick up the charges. However, Southwest stated that even though business travelers don’t have to pay, some will have to process an expense report and explain why the additional charges are on the trip. That is annoying and takes time.

Southwest’s next step is to advertise they do not have ticket-change fees either. This won’t be as easy to get across to customers as the no bag fees. It is more obvious for a passenger to know if they have to pay for a bag. It is more difficult for passengers to know if something will come up and they will need to change their flight. Southwest feels confident they can get the message across with a series of new creative ads.

Gary Kelly, Southwest’s CEO and President, wondered out loud at their recent Media Day event, why airlines would do something passengers hate. He stated that Southwest feels lucky that almost every other airline is charging for bags and they are not.

We won’t know how successful no fees will be, but so far Southwest is reporting both growth in leisure and business travelers. I have previously stated it is not an airline’s fault for charging fees… passengers choose to pay them. If passengers are willing to pay fees, airlines will continue to charge them. If passengers rebel against the fees and choose airlines that do not charge them, you will see fees start to go away (although ticket prices will most likely go up). It is a great experiment and I think so far it is working well for Southwest.