United Airlines CEO Explains Why Southwest Airlines Lost its Mojo

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 (that’s called the No True Scotsman fallacy), 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