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Flyer Beware: Southwest Bag Fees Coming Next Year?

Justin Maiman
Daily Ticker
Flyer Beware: Southwest Bag Fees Coming Next Year?

Bags Fly Free! That's the Southwest Airlines motto. One of the company's ads calls the policy "ridiculously awesome."

Flyers tend to agree with that. Besides Southwest, JetBlue Airways (JBLU) is the only other major airline that doesn't charge for baggage these days.

But could Southwest (LUV) be preparing the public for a change in its free baggage policy?

On the company's earnings conference call yesterday, CEO Gary Kelly made some comments that some analysts and reporters took as a sign of things to come. Here's the line from The Wall Street Journal today, you be the judge:

Mr. Kelly said that if fliers come to better understand and maybe even prefer "an a la carte approach…we'd be crazy not to provide our customers with what they want." (Italics added for emphasis.)

Related: Airfare Reality Check: Are Five Major Airlines Really Better than Four?

Yahoo Finance senior columnist Mike Santoli says a change does makes sense. "I think they actually have to seriously consider it only because we've become so conditioned to basically paying up for things like checked bags, for meals, that they're essentially leaving tens of millions of dollars on the table."

Wolfe Research airline analyst Hunter Keay tells The Daily Ticker that if Southwest adopted an aggressive fee structure in the future, it could add $1 billion to the company's incremental revenue.

In the video above, Lauren Lyster asks Santoli: Could adding a baggage fee hurt the company in any way?

"There's no doubt that Southwest is gaining market share and...it's not because they don't charge for bags obviously," Santoli says.

So it probably wouldn't hurt the company's bottom line "too badly" if they added some fees, he adds.

Other U.S. airlines collected $3.5 billion in baggage fees last year.

According to U.S. Department of Transportation data, Delta Air Lines (DAL) was first with $866 million in baggage fees. United Airlines (UAL) -- now known as United Continental Holdings -- brought in $706 million in baggage fees.

That's a lot of cash to leave on the runway.

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