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Southwest Airlines will keep its 'bags fly free' policy

Southwest Airlines will keep its 'bags fly free' policy
Southwest Chief Executive Gary Kelly says he won't rethink the airline policy of charging no fees for the first two checked bags. (Danny Johnston / AP)

Southwest Airlines has no plans to bag its free-bag policy.

Although every other major carrier in the industry now charges bag fees, Southwest Airlines Chief Executive Gary Kelly says it makes financial sense for his airline to retain its "bags fly free" policy.

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At a business travel conference in Orlando this week, Kelly was asked whether he would rethink his policy of charging no fees for the first two checked bags after JetBlue Airways began last month to charge at least $15 for the first checked bag.

Until that change, JetBlue was the only other carrier to offer at least one free bag for all passengers.

Although bag fees generate huge revenues for other carriers, Kelly said he fears that Southwest would lose some market share to its competitors by charging for the first two bags. The Dallas-based carrier is the nation's most popular domestic airline.

"Who wouldn't want to be the only competitor doing a certain thing?" he said.

In the first three months of 2015, the nation's largest airlines collected more than $864 million in revenue from bag fees, according to the U.S. Department of Transportation.

For now, Southwest is doing well without the bag fees.

For the three months that ended June 30, Southwest posted net income of $608 million, or 90 cents a share, compared with net income of $465 million, or 60 cents a share, in the same period last year.

Excluding one-time costs, the profit represents an all-time quarterly high and the ninth consecutive quarter of record earnings for the carrier.

To read more about travel, tourism and the airline industry, follow me on Twitter at @hugomartin.

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