United Airlines CEO Scott Kirby believes that recent changes at Southwest Airlines may be a necessary growing pain for the carrier, but will end up pulling more business from Southwest as it loses another structural advantage it enjoyed over network carriers like United.
United Airlines CEO Explains The Fall Of Southwest Airlines…And It Wasn’t Even Southwest’s Fault!
I continue to find nuggets of fascinating insight across Kirby’s remarks at the J.P. Morgan Industrials Conference on March 11, 2025.
Kirby called the elimination of free checked bags on Southwest the “slaying of the sacred cow,” adding that the move is “one of the two big things that gets Southwest back to industry leading margins – that and stop flying places that lose money.”
But to understand why Southwest “lost its mojo” we must rewind the clock back to 2020. The pandemic was raging and United Airlines suddenly announced that it was “permanently” eliminating all change fees. American Airlines and Delta Air Lines quickly matched.
Suddenly, a structural advantage that Southwest Airlines enjoyed – as the only major US carrier that had no change fees – was gone. That changed the balance of power in Denver, with more passengers flocking to United now that there were no change fees on United either. Per Kirby:
So in a place like Denver, United had change fees in place, there were a segment of customers that United was the brand loyal airline, the segment of customers. I’m not trying to knock on Southwest. Southwest had those customers, those domestic road warriors, the biggest advantage that Southwest had over United was no change fees.
For customers that mattered, that was enough to overwhelm our frequent flyer program and first class and clubs and food and all the other stuff. But now that’s a tie. We’re not better, but that’s a tie. And all the other stuff that United wins. And so the brand loyal customers moved, not because Southwest did anything wrong, they didn’t.
But we just matched their one competitive advantage, and those brand loyal customers have switched. And so it’s just that’s the point about it, it’s sticky. Those customers are sticky. And as other airlines incrementally move closer to us, it’s not going to be enough that they pass us and an airline and a customer decides to switch. They’re just they’re sticky at United.
(For more details on what Kirby means by sticky customers, see here)
Southwest still had one small advantage…two free checked bags (even on its cheapest “Wanna Get Away” fares). Starting May 5, 2025, that advantage will also be gone. Here, Southwest’s change will also help United at Denver and other carriers as well as it further levels the playing field between the two.
For those passengers who may have chosen Southwest due to the its liberal baggage policy, some may stay with the carrier becuase Southwest Airlines co-branded credit card holders will continue to receive one bag, but it’s reasonable to suggest many will have yet another reason not to be loyal to Southwest…and that will benefit United.
> Read More: United Airlines CEO Thinks Customers Are “Sticky”
CONCLUSION
I appreciate that Kirby is both clearly knowledgeable about the matters in which he is speaking (though sometimes wrong, like we all are) and also articulates those thoughts clearly…he’s a very effective communicator. He’s also right in explaining why Southwest Airlines lost its mojo was not even Southwest’s fault, but rather other carriers becoming more impressive by eliminating change fees. The elimination of free checked bags will further remove an advantage Southwest has enjoyed over its peers and with United’s additional product offerings, loyalty program, and route map, move many customers on the margins over to network carriers like United.
And a final side note:
The dullards among us dismiss my dire prognosis of Southwest (or Kirby’s) because we never fly on Southwest, but that’s like saying that I cannot criticize Congress because I’ve never held public office. Stupid people. Direct experience can add insight, but it’s not a prerequisite for forming a valid opinion. Arguments and criticisms stand or fall based on the strength of evidence and reasoning – not the critic’s personal experience. Yes, you can criticize a business model or product based on publicly available facts, customer reviews, or even broader market performance – even if you haven’t personally engaged with it. To say that my criticism of Southwest is invalid is a lazy rhetorical defense that avoids addressing the actual point being made, but par for the course for losers who have nothing better to do with their time than tear down others. I’m laughing at you. We all are.
image: Bill Abbott
None of his business .
The words of someone justifiably confident he will eat someone else’s business for lunch.
The words of a punk .
Nah. No true Scotsman is replying to evidence to the contrary by excluding that group.
“Tesla owners all support Trump”
“We’ll, Bob owns a Tesla and just lost his job.”
“No doubt he’s selling the car.”
On the other hand, claiming that only those who fly Southwest can criticize their business model is a weird form of appeal to authority, somewhere around TV Doctor (=being associated with the business makes one an expert in it).
A customer of Southwest would have a better evaluation of the strengths and flaws of Southwest .
Kirby is sticking his nose in , and attempting to publicly belittle or undermine a competitor .
He sure likes to overanalyze his competitors (and tell everyone about it)
you might want to reread the article again. No where does Kirby belittle SWA, in fact he says things that happened weren’t even their fault. He simply stated that SWA is losing an advantage they had with a segment of the flying public that helped them choose SWA. Once you remove those advantages, customers are looking at everyone again and realizing hey United (Delta, American, etc..) flies more than 737’s, flies around the world, and has more onboard amenities and food, and they start to fly them more and thus SWA has lost a customer.
Bubba, you’re right that this is appeal to authority, but I invoked the No True Scotsman fallacy because the little people shifted the goalposts and narrowed the criteria of who was “qualified” to criticize something based on an arbitrary condition (in this case, having flown with the airline). Isn’t that what this logical fallacy is? The retroactive modification of an initial claim (everyone reasonable person thinks Southwest’s change policy is wise) in order to protect it from counterexample (I don’t) by attempting to delegitimze me?
As an economist, I can say that’s it’s not just the bags. It’s the prices. Bag fees and change fees aside, SWA no longer offers competitive fares. It might be fine for shuttle routes but it’s a joke of a carrier for any flight requiring a connection, playing the “first to board” seat game circus, etc. The airline was attractive to domestic infrequent fliers who were willing to “play the game” for their weeklong trip to Vegas, but now the fares aren’t there.
I’m not an economist but I’ve been saying this for literal years. WN’s price halo from the 1980s and early 1990s disappeared ages ago. Their sole differentiator to anyone remotely intelligent about airfares was the checked bag issue and non-expiring miles. Actual frequent fliers only fly WN if it’s a specific point-to-point route that only WN serves. And they take it for convenience, nothing else. For instance, MCI-STL is a WN-only route. If you don’t want to drive that, WN is a good replacement. Opposite that, people that will ONLY fly WN MCI/STL-MDW because they simply do not know that AA and UA have hubs in Chicago and offer just as many (or more) flights at more competitive fares.
The only people that are loyal to WN and still buy into WN as a subjectively “good” airline are your INfrequent fliers that are generally un(der)informed travelers – or they have a companion pass which is likely going away soon, too. They don’t understand airfare algorithms, they no understanding of how airlines work in general, they don’t care about loyalty programs because they don’t fly enough for them to be valuable, and are easily duped into thinking the WN of the corndog livery is the WN of today’s Barney-the-Dinosaur livery.
The old Southwest passengers will switch over to American and Delta. United doesn’t allow a carry on for the cheapest tickets.
It’s a good point – I hope UA will change that once it finishes updating it older aircraft with “United Next” larger overhead bins.
My driver is a southwest loyalist. He always pays for the early boarding. Wednesday I mentioned the no more free bags. Thankfully we were in a parking lot. So shocked his jaw dropped. I think Kirby is correct if this is an indication of customer reaction to the changes.
Southwest should have gone down to 1 free checked bags except for Wanna Get Away fares and, for the most expensive fares, still 2 bags free.
Alaska Airlines’ advantage is passengers earn more miles because it’s distance based, not dollar based.
The other SW killer is that their previous loyal fliers now feel that they have been disowned. So not only did they lose the perks that made them feel special (open seating and free checked bags) but that SW has sold out to the big bad well street fund. The combination is deadly for them.
Love this: Direct experience can add insight, but it’s not a prerequisite for forming a valid opinion.
I was a near 17 yr employee for Southwest Airlines. A great company at one time but unfortunately Gary Kelly destroyed the company and the culture of Southwest and Bob Jordan with his Southwest Corporate Stooges were passed the torch and carried on in further destroying Southwest. Arrogance and Conceit is what brought it down. Hopefully Elliott Roto Rooters the entire Southwest Corporate Offices
I respected your opinion, until your “final side note”. I thought all of your points were valid, with legitimate reasoning. But why preemptively denigrate anyone who may critique your argument, because you don’t fly them, and subsequently call them stupid? Lot’s of people have their reasons for flying specific airlines, and you have yours. It makes you look insecure in your argument.
Final side note is inside baseball talking directly to a group of patehtic, jealous, losers who have already attacked…I wasn’t even aware of their drivel until a fellow blogger sent me some screenshots and I was amused that some folks have way too much time on their hands and choose to use it to not only denigrate others (people not viewpoints), but to do so very foolishly. My “final side note” was to invite them to reconsider their asinine behavior and do something constructive with their time.
Kirby should be more concerned with United stock losing 40% since recent highs.
As a loyal SW flyer for years, I agree with the points that were made. Open seating worked for me because I usually board A. Unfortunately these days they’re often on the higher end of fares. By taking away the perks, there is literally NO reason to fly them over the Big 3. Sad day
I think he’s “partially” right. It’s much more than the simple answer he’s giving though. Elliott, the catalyst for all of this had a door opened during the holiday shut-down fiasco (and subsequent stock drop). I like to say that the mold was cast then and moreso when SWA stock stayed down due to a series of fumbling around. Finally, don’t underestimate the downside effects on frequent flyers with all of the scamming of the board process (faux handicap line jumping). As a frequent flyer on Southwest, when one books a premium slot (A1-15) and then sees two-dozen folks line up in wheelchairs to board first (most just scamming the system), it created a lot of angst as well. Again, not much that SW could do about it. However, all of these negative things should have been offset with some value add…whatever that could have been.