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Southwest Airlines flies people around the United States on cheap, no-frills flights, making money from tickets and extras like checked bags.
Southwest Airlines is a budget airline that flies people mostly around the United States. You buy a ticket, show up at the airport, and get on a plane that takes you where you need to go. It is famous for keeping things simple and cheap: one kind of plane, no first-class cabin, and a friendly, casual style that made flying feel less fancy and more like taking a bus in the sky.
The way it earns money is straightforward. Passengers pay for tickets, and they also pay extra for things like checking bags or buying a drink and snack on board. Southwest has long been known for letting people check two bags for free, which was a real selling point. But in 2025 the company started charging for checked bags on many tickets, a big change after years of holding out. It also sells a loyalty program and a co-branded credit card with Chase, which brings in steady money from people who collect points toward free flights. What makes Southwest strong is its cost discipline and its route network. It flies point to point instead of running big hubs, and it uses only Boeing 737s, which keeps maintenance and training simpler and cheaper. That focus helped it stay profitable for decades, including a long streak of profitable years that was rare in the airline business. But airlines are a tough business: fuel prices, labor costs, weather, and recessions all hit profits hard, and Southwest has had to deal with rising costs and pressure from competitors like Spirit, Frontier, and the big legacy carriers.
In recent years Southwest has been under real strain. A massive flight meltdown in December 2022, when its scheduling software failed and thousands of flights were canceled, damaged its reputation and cost it money. Activist investors pushed for changes, and the company has been rethinking its strategy, including assigned seating and the bag fees. Airlines also depend heavily on borrowing planes and managing debt, so free cash flow swings wildly. Southwest has used its cash to keep its fleet young, pay down debt, and return money to shareholders through buybacks and its small dividend, but the business remains cyclical and fragile.
Saved answer · last researched 21 Oct 2026