Ending Free Bags Could Prove a 'Costly Mistake' For Southwest Airlines

Last week, Southwest Airlines officially began charging for checked bags, ending its longstanding "bags fly free" policy in an attempt to bring in more profits. But it sounds like there's a chance the move could backfire.

Roger Dooley of Forbes is a speaker and author who covers science-based business strategies. In a recent article, he warned that by instituting a $35 charge for checked baggage, Southwest Airlines is making a rather costly mistake in consumer psychology in a number of ways.

As Dooley explains, Southwest customers will feel the loss of the free bags more than the actual cost because it felt like the free bags were something they already "owned."

"Behavioral economists know that people feel losses about two to three times more intensely than equivalent gains. Southwest customers aren’t only seeing a $35 change in the cost of flying from point A to point B," Dooley wrote for Forbes.

"Rather, they’re experiencing the loss of something they already 'owned' in their mental accounting. The well-established endowment effect says that people value something they currently own more than the same exact thing when it’s not theirs."

Another point, as Dooley warns, is that since Southwest established free bags as a key and integral part of its brand, getting rid of that could erode consumer trust and damage the brand.

"Southwest literally trademarked 'bags fly free' and built entire advertising campaigns around being different from other airlines. This major reversal is inconsistent with its long-established brand image. The change creates cognitive dissonance that damages trust far beyond the fee itself," Dooley wrote.

"When customers chose Southwest, they were choosing to avoid exactly this kind of nickel-and-diming. Now, they're questioning what other promises might be broken next."

One final point that Dooley makes is that Southwest customers are "anchored" to Southwest's promise of $0 for checked baggage, meaning customers will compare the new $35 charge against the previous $0 charge, not the similar charge currently in place by other airlines. This makes the new bag fees feel disproportionately expensive.

"Even though Delta, United, and American charge similar amounts, Southwest's fee will feel worse because of the broken expectation," Dooley wrote.

This is a lot to overcome for Southwest, and the numbers don't seem to be on their side, either.

We'll have to see how the airline fares in the coming years after making such a major change.