Performance pressure is overwhelming. Southwest Airlines Co. (LUV.US) ends its policy of free checked baggage.

Southwest Airlines Co. (LUV.US) will terminate its popular "two free checked bags" policy this week, as the airline company reforms customer benefits to increase revenue. According to reports, an internal memo shows that Southwest Airlines Co. will start charging $35 for the first checked bag and $45 for the second checked bag starting from May 28th. The new fee structure is similar to that of other airlines for checked baggage. Passengers with the highest membership level can still check two bags for free, while those holding the airline's credit card or lower level passengers can check one bag for free. The highest fare type of Southwest Airlines Co. also includes free checked baggage for two bags. Passengers who purchased tickets before May 28th can still check two bags for free, unless they change flights after the fees take effect. It is understood that Southwest Airlines Co. has been implementing a free baggage policy since its establishment over fifty years ago. The decision to cancel the "baggage free" benefit is a significant shift made by Southwest Airlines Co. under pressure from activist investor Elliott Management Corporation. Due to "weakening macroeconomic environment leading to softening booking and demand trends," Southwest Airlines Co. lowered its financial guidance in March. Southwest Airlines Co. will also launch its new basic economy class tickets, which are nonrefundable and non-changeable. These tickets will replace the "Wanna Get Away" tickets, becoming the cheapest option for Southwest Airlines Co. Tom Doxey, the CFO of Southwest Airlines Co., stated last week that the new checked baggage fees will bring incremental revenue. Doxey also stated, "With reduced baggage volume, we can also save costs." As of the time of writing, Southwest Airlines Co. is up 2.91% in pre-market trading.