In the next two years, Southwest Airlines plans to undergo a significant makeover that it hopes will substantially boost passenger traffic. Southwest is remodeling the inside cabins of its 800 current aircraft, adding extra red-eye flights, and switching from open seating to assigned seating after 50 years.
The carrier is revamping its customer experience to provide customers with more options and comfort, boosting revenue and bringing the company back to the industry’s profitability rankings.
“We’re now ushering in a new era at Southwest, moving swiftly and deliberately to transform the Company by elevating the Customer Experience, improving financial performance, and driving sustainable Shareholder value,” said Bob Jordan, President, Chief Executive Officer, and Vice Chairman of the Board.
Transformational plan
Southwest has been considering a major transformation for several months, but the urgency for significant changes intensified for management this summer when Elliott Investment Management set its sights on the airline due to its poor stock performance since early 2021. Elliott now holds over 10% of Southwest’s shares, making it the airline’s second-largest shareholder. The adjustments to some of Southwest’s unique practices aim to counteract its declining profits and falling stock value.
Although Thursday’s event is geared towards investors, it will also captivate consumers, who can expect to learn new information about how assigned seating and premium seating will operate at Southwest. The open-boarding system that has been in place for over 50 years will be phased out, with passengers receiving assigned seats, similar to those offered by other major airlines.
The airline’s progression will offer even more options for its customers while retaining elements that distinguish it from its competitors.
Assigned Seating
Southwest aims to enhance its appeal to consumers and increase demand through an assigned seating system. Airline passengers have expressed a strong preference for seat assignments, 80 percent of Southwest customers and 86 percent of those flying with other airlines favor assigned seating. As Southwest extends its routes, seat assignments are becoming increasingly important for longer flights. The company anticipates starting to offer assigned seating in the latter half of 2025, with initial flights using the new system anticipated in the first half of 2026.
Premium Seating
Market analysis indicates that the desire for a seat with additional legroom is highly appealing to both business and leisure travelers. Southwest will introduce extra legroom options, providing up to five additional inches of pitch for about a third of its seats while maintaining a standard economy seat pitch that ranks among the best in the industry. These new seating options are expected to stimulate demand and generate increased revenue per passenger.
Bags Continue to Fly Free
Comprehensive research underscores that Southwest’s bags fly-free policy remains the most distinguishing feature that sets it apart from other airlines. Based on this research, the company believes that altering the current policy, which allows every customer two complimentary checked bags, would diminish demand and significantly outweigh any revenue benefits gained from implementing bag fees.
“We have devoted recent years to establishing a groundwork that supports our transformation,” stated Ryan Green, Executive Vice President of Commercial Transformation. “We have begun introducing updated cabins featuring enhanced Wi-Fi, in-seat charging, more spacious overhead compartments, improved operational efficiencies, and better flight schedules. We will keep leveraging our distinctive competitive strengths while responding to consumer demands in the ever-evolving landscape.”
New Offerings to Broaden Appeal and Strengthen Revenue
Beyond enhancing Customer choices, Southwest will introduce new capabilities and offerings aimed at increasing value and revenue opportunities.
Airline Partnerships
Southwest is formalizing collaborations with international airlines to broaden its network and provide Customers with access to more global destinations, thus driving additional travel demand across the Southwest system. Icelandair will be the first partner, with an anticipated launch in 2025 via Baltimore-Washington International Airport, serving as its inaugural U.S. gateway. The Icelandair partnership will extend gateways throughout 2025, and Southwest plans to incorporate at least one more partner airline next year.
Getaways by Southwest
In 2025, the Company is set to unveil a new offering, Getaways by Southwest, which will provide industry-unique vacation packages accompanied by the friendly policies Customers have come to expect from a Southwest-operated initiative. These customizable vacation bundles will highlight Southwest’s flexible cancellation policy and the absence of change fees for flights, as well as hotels and other elements of the packaged vacations.
Optimizing Operational Efficiencies
Southwest is prioritizing operational efficiencies to alleviate cost pressures and modernize its processes. These initiatives aim to support nearly all new capacity growth over the upcoming three years without the need for additional aircraft capital investment.
By February 2025, Southwest plans to begin offering overnight flights in key markets to optimize aircraft usage. The airline is focused on further decreasing the turnaround time for aircraft, which is designed to enhance productivity while simplifying daily operations for Employees.
