Southwest Airlines on Thursday announced changes to its longtime business model in the hopes of reversing turbulence from declining profits and a sinking stock price.
The Dallas-based carrier is pivoting from the so-called open seating model, charging a premium for the best seats, and offering red-eye flights, the airline said in a press release.
"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, Southwest’s president, CEO and Vice Chairman of the Board, in a statement.
The airline described the overhaul as an "evolution" spurred by customer surveys about the changing needs and expectations of travelers.
Southwest Airlines said most of its customers surveyed want to know their seat assignments instead of choosing among open seats as they board the plane. (Kevin Carter/Getty Images, File / Getty Images)
Southwest said that 80% of its customers surveyed want their seat assigned before arriving at the airport rather than picking a seat when they board. The airline expects to operate flights under this new model in the first half of 2026.
For travelers with a preference for extra legroom, Southwest said it will allow customers to purchase premium seating options while maintaining standard economy seating.
Southwest said that its "bags fly free" policy will remain unchanged. ( Scott Eisen/Bloomberg via Getty Images, File / Getty Images)
Famous for its "bags fly free" policy, which allows customers two free checked bags, Southwest confirmed that there will be no changes to the popular feature.
"Extensive research reinforces Southwest's bags fly free policy remains the most important feature by far in setting Southwest apart from other airlines," the company said.
Southwest hopes to drive shrinking profits with the announced changes. (Photo by DANIEL SLIM/AFP via Getty Images, File / Getty Images)
Southwest said it expects to begin offering red-eye flights in "key markets" beginning in February 2025. The company did not specify which markets in the press release.
The changes come as the airline is facing pressure to boost profits from activist investor Elliott Management.
The carrier's chief operating officer, Andrew Watterson, notified workers in a Sept. 19 video that changes were coming to the company, Bloomberg reported, citing a transcript.
"There are some difficult decisions coming as well," he also said, telling employees that "bigger changes for some cities" that were "not city closures" are coming.