Southwest Airlines unveiled its plans to “transform its customer experience” at an Investor Day event on Thursday in Dallas. Bob Jordan, CEO, said, “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.” The airline’s evolution, he said, “will provide even more choices for its customers and preserve aspects of the business that make the airline unique among its competitors.”
The airline is making the moves under increasing pressure from an activist hedge fund, Elliott Management, which has taken a stake of more than 10%. Elliott has said the airline is underperforming and has placed some blame on Jordan.
Plans include:
- Assigned Seating: Southwest will broaden its consumer appeal and boost demand through an assigned seating model. Airline passengers now have a clear preference for seat assignments: 80% of Southwest customers and 86% of passengers who choose other airlines want assigned seats. Southwest flies farther than ever, and seat assignments are a higher priority on long-haul flights. The company expects to begin selling assigned seats in the second half of 2025, with its first flights operating with the new model in the first half of 2026.
- Premium seating: Market research shows that the preference for an assigned seat with extra legroom offers broad appeal for both business and leisure travelers. Southwest will offer extra legroom options with up to five additional inches of pitch for approximately a third of its seats while maintaining a standard economy seat pitch among the best in the industry. New seating product options will drive demand and are expected to generate more revenue per passenger.
- Southwest boarding with upgrades: Southwest will evolve its boarding process with seat assignments while focusing on operational efficiency and improving the customer experience. The updated boarding process will maintain Southwest’s approach in boarding through position numbers and signage displayed on stanchions within the gate area. The carrier’s most loyal customers and those who purchase premium seating will continue to be among the first to board.
- Bags continue to fly free: Extensive research reinforces Southwest’s bags fly free policy remains the most important feature by far in setting Southwest apart from other airlines. Based on research, the company believes any change in the current policy that provides every customer two free checked bags would drive down demand and far outweigh any revenue gains created by imposing and collecting bag fees.
Ryan Green, executive vice president commercial transformation, said the carrier has spent the past few years laying a foundation that serves as the base of the transformation. He said Southwest has already started rolling out modernized cabins with improved WiFi, in-seat power, larger overhead bins, enhanced operational efficiencies and optimized flight schedules.
In addition to the new customer choice options, the airline also outlined plans for: more global airline partnerships; enhancements to the Rapid Rewards loyalty program; improving operational efficiencies like turn times between flights; and delivering a financial plan that will include cost discipline, strategic fleet management and prudent capital deployment.
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