Southwest Reports Record Quarter, Won't Rule Out Baggage Fees

Oct. 25--As Southwest Airlines celebrated a record third-quarter profit Thursday, the fate of its beloved no-fees baggage policy was called into question once again.

The busiest carrier at Orlando International Airport reported a profit of $259 million, compared with $16 million a year ago. Part of the gain was attributed to Southwest's efforts to modernize its planes, a move that has reduced fuel and maintenance costs.

By day's end, the story had turned from Southwest's successful quarter to whether the end was near for its "Bags Fly Free" policy.

In a call with analysts and news media, Southwest CEO Gary Kelly wouldn't rule out an eventual change in the policy, although he made clear there were no plans to do so before the end of 2014.

"Right now, it's our belief that we get more customers and more revenue by not charging for bags," he said.

As he has before, Kelly left the door open for future changes, saying that if over time customers would come to prefer a la carte pricing, the company would be "crazy" not to adopt it. The comment fueled speculation that bag fees were on their way.

Reached after the earnings call, Southwest said the company wasn't hinting at any changes on the way.

"Basically, Gary is saying, as he always does, 'Never say never,' " said Brad Hawkins, a Southwest spokesman. "The headline is that we have no plans [to add bag fees]."

Southwest, which together with its subsidiary AirTran carries about a third of the passengers at Orlando International, has often been pressured by analysts on bag fees, which have become a lucrative source of revenue for most other domestic airlines. The fees can run $25 or more for a piece of checked luggage. On Thursday, the airline remained firm.

"Southwest has an undeniably successful strategy that is customer-friendly," Hawkins said.

Kelly indicated that any changes were off the table through 2014, as the airline completes the complicated task of integrating its operations with those of AirTran Airways, the Orlando-based carrier that Southwest purchased in 2011.

"A change in the fee structure, would be, I think, a significant distraction," he said.

skclarke@tribune.com or 407-420-5664

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