"Transformational change": Southwest Airlines is doing away with open seating
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Southwest Airlines is shifting to assigned seating and will offer some premium seating with extra legroom, the low-cost carrier announced on Thursday as part of a significant shakeup to its traditional business model.
Why it matters: The changes come the same day the airline reported second quarter results that beat some expectations following a bump from a summer travel boom but still "fell short" in other key areas.
How it works: Over its 50-year history, Southwest has had an open seat model, with passengers only assigned a boarding group and a number that represents a reserved spot within that group.
- The airline said it performed research and found that 80% its customers and 86% of potential customers preferred assigned seating.
- "When a Customer elects to stop flying with Southwest and chooses a competitor, open seating is cited as the number one reason for the change," it said.
- The company didn't specify when the changes would go into effect but said it would provide more details in late September.
Thought bubble, via Axios' Alex Fitzpatrick: This is a monumental change for Southwest, which has long held on to its old-school way of doing things even as other airlines raked in revenue from options like "economy plus" seating with extra legroom for slightly higher fares.
- And it comes as Southwest faces pressure on both sides: More premium airlines are making money off economy plus seating, while ultra low-cost carriers are stealing away budget travelers with truly no-frills flying.
Zoom out: In addition to the seating changes, Southwest said it would begin offering overnight, redeye flights in five initial nonstop markets: Las Vegas to Baltimore and Orlando; Los Angeles to Baltimore and Nashville; and Phoenix to Baltimore.
- The flights are currently on sale but won't take off until Valentine's Day.
What they're saying: Bob Jordan, Southwest's president and CEO, said in a statement Thursday that the shift to assigned seating and better legroom options "will be a transformational change that cuts across almost all aspects of the Company."
- "Although our unique open seating model has been a part of Southwest Airlines since our inception, our thoughtful and extensive research makes it clear this is the right choice — at the right time — for our Customers, our People, and our Shareholders," Jordan said.
The big picture: Southwest has long resisted altering its seating procedures.
- But the changes come amid sharp criticism from an activist investor and $231 million in first-quarter losses.
- The airline also experienced a series of potentially dangerous incidents this year.
- The air carrier will still offer free checked bags. Elliott Investment Management, the activist hedge fund that invested nearly $2 billion in the airline's stock earlier this year, had proposed eliminating the its "bags fly free" policy.
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