Southwest Airlines announced that former CEO and current Chairman Gary Kelly will step down. That’s half the leadership change that Elliott Management has been demanding. Several other board members will leave. Then they will grow the board again. It appears that Elliott will get representation.
While Kelly is much-maligned in recent times as a bean counter, relatively to Southwest’s past, he’s also a life-long passionate advocate of the brand and Southwest way of doing things. It was this insularity that Elliott objected to. They appear to want to remake Southwest, long prized relative to the industry by investors, in the image of JetBlue and American.
With greater Elliott sway, and Kelly leaving, rumors are swirling in Dallas that other changes pushed by Elliott will be implemented. We may or may not learn details at the airline’s investor day this month. Two major changes that are being widely discussed at headquarters are an anticipated end to free checked bags, and the introduction of basic economy.
Here’s what basic economy would look like if Southwest moves forward, I am told.
- No advance seat assignments. Southwest Airlines plans to move to assigned seating. Basic economy customers would receive a seat assigned to them at check-in.
- No more free checked bags. I’ve written that a basic economy fare would restrict checked bags. My thought was that they would offer one free checked bag, rather than two. They continue to advertise ‘bags fly free’ as core to their value proposition. But the rumor is they’d do away with free checked bags on basic economy fares only, charging for even the first checked bag.
- Board last. This is less important when boarding order no longer affects choice of seats, though if they dump free checked bags even from some customers that will mean more carry-on bags so those boarding last could risk not having overhead bin space (this is also a drag on the operation, as the airline would have to spend time at the last minute on checking bags).
- No full-sized carry-on. But bin space may not matter (and so board last becomes even better, not worse) because the rumor would have Southwest taking a page from the United Airlines playbook, restricting basic economy passengers from bringing a standard-sized carry-on bag on board. That means more checked bags that they charge for, which means the basic economy fare is more expensive for most passengers than the advertised fare.
I don’t know whether this comes to pass, but I have to wonder whether eliminating checked bags entirely from basic economy would lead to changes in free checked bags at other fares – e.g. only one checked bag on most fares would still let them brand themselves ‘bags fly free on most fares’.
Meanwhile I have to think that this plan is influenced by the fate of the Department of Transportation’s fee disclosure rule, that’s been enjoined by a federal district court. DOT requiring bag fees to be displayed up front with airfares makes Southwest ticket prices look more competitive – and Southwest needs to display their prices on comparison sites to win more business (they already have added their inventory to Google Travel and Kayak).
If the DOT rule went into effect, there’s less impetus for stripping out benefits from their fares, although it’s not just about getting people to buy pricier tickets or charging them more fees, but also about the tax benefit from shifting part of the ticket out of the fare and into fees – this saves the 7.5% federal excise tax on domestic airfare, and could be worth $50 – $100 million in tax savings annually to the carrier.
Seems Southwest will become just another domestic carrier. If the regulatory scheme becomes right, which might happen if airlines in mass begin to lose money, I see Southwest merging with one of the other US3. It’s “unique” business model is essentially dead.
Man, what would American pay to get Southwest out of the way? Not that they could afford it…
These changes are long overdue. It has been a decade or longer since Southwest was materially cheaper than other airlines. The brand image of free checked bags and open seating is worn and tiresome. As domestic first class (which, of course, comes with free bags too) becomes more attainable for more travelers, the economy-only layout of Southwest cabins lose appeal.
Southwest needed to become just another carrier 5 years ago. The second best time is right now.
@SFO/EWR … Southwest ought to (a) lower it’s fares , (b) keep the free baggage check , and (c) remove some of the seats , for more leg room .
Basic economy fares are simply an attempt to siphon off passengers and kill ultra low cost carriers but make no economic sense on their own; a BE fare is just a discount off of higher fares that should only be sold when you can’t sell something better.
WN’s problem is that it has too much capacity – too many 800s/MAX 8s in “hubs” that aren’t big enough to fill all of the seats.
The good news for WN’s employees is that WN has locked in their labor costs so there is little to no opportunity for Elliott to go looking for labor cost savings other than efficiency gains that better technology and scheduling permit.
and this is a good time to remind the people that want to throw WN under the bus that WN’s stock has still performed better over the past year than AA’s. WN has stockholder equity which only AA stockholders can dream about.
Transfarency is transitioning. What could possibly go wrong?
In none of southwest’s public releases have they said they are doing away with free baggage. This is blatantly false and should be removed from this publication. They have only released assigned seats and red eye flying.
I do not think that this will work for a variety of reasons:
1. I do not see Southwest charging lower prices for basic economy. If one does not lower the prices for it, Southwest is then more expensive than their competitors in most instances. If this is the case, it seems that there is no incentive to book with Southwest.
2. Southwest’s premium seats will still not provide a real first class experience. People looking for that will likely go elsewhere for their flights.
3. Many of the people who claim that they want assigned seats, etc. still likely won’t be impressed by Southwest’s new product, so they will likely go elsewhere for their flights.
4. The loyal Southwest customers will likely become non-loyal, and this will likely drive the airline downhill.
5. Taking away “bags fly free” is taking away the one thing that the brand is known for so doing this will ruin the identity.
Look at how JetBlue has struggled after it moved away from its identity as a nicer airline for consumers.
This is really upsetting. I am curious what Kelly meant when he said that he completely trusts Jordan and if they have any hope of Jordan keeping some things with the Southwest culture.
These proposed changes will gut Southwest of loyal, frequent fliers. A great airline will be ruined by greed.
WN’s product (to borrow from UA leadership) is their routes. They do airport pairs others have a hard time with. I’m not a WN fan because of not being in an alliance and having backup for IRROPs, but I think the only thing they really need to do is start selling assigned seating. Their boarding process stopped working well more than a decade ago.
Gary leaving means the end of the era; he recalls the tradition that top Execs were out in the weather on the ramps during Holidays, hustling luggage like the rest of the crews; Friday PM beer/hamburgers on the ledge at Dallas headquarters, nobody at SW named “Mr”, relative-peace with all ‘team members.’ Jordan won’t last, the Fund Managers will send in a bean-counter to sell assets, lease them back, pocket the profits. I gave my daughter the LUV stock ages ago, I’ve sent her a note to sell it.
All they needed was assigned seating and a computer system newer than 1990s.
They resisted that and look what they got.
Sorry not sorry.
If they make these changes, I will say goodbye to Southwest. The big reason I fly them is the free bags and flexibility. Sometimes I sacrifice and connect because of the free bags now I’ll just go on Delta, which is a better airline and I still get a free bag with the credit card.. plus most of my flights out of Atlanta will be direct on Delta.
As a loyal Southwest flyer for the last 16 years, I never bothered to check any other airlines because the rest have absurd boarding practices. I like picking my seat based on where the fat people are. Southwest as a bus was great. But looks like they will lose me as a loyal client. I’ll shop all of the others
Southwest has been successful because they aren’t any other airline. If they change that then why bother flying them. Living in Dallas and flying out of love field is convenient.
Why would any airline want to emulate the disaster that’s American Airlines???
No worse airline than Jetblue..please don’t try to emuiate..I fly Southwest anytime i can due to the companion fare.my Wife and I fly @ least 1 time a month..She has not paid for a flight since the companion fare program started i the 1990’s
I live in the Midwest, where almost every destination is available nonstop on Southwest. But I avoided flying them because of their boarding policy and no premium seat offer. They are likely to get my business now. Welcome to the 21st-century.
Southwest is making so many big mistakes I don’t know how loyal egalitarian fliers like me can handle it. I’ve been flying Southwest since I lived in Dallas in 1973. I like choosing my own seat on board. I like the easy boarding process. I like being he quick turn around the other clumsy airlines will never figure out. I fear SW will be like the other airlines I loathe. Expensive, tortured, and avoided.
I live in Atlanta, where almost every destination is available nonstop on Delta. But I flew Southwest because of their no premium seat offer meaning prices were consistently lower than Delta, even on basic economy fares. They are likely to lose business now. Welcome to the 21st-century.
We never fly any other airline. SW is so much more efficient than the others partly due to the lines ABC. I am so afraid that major change will change the friendly employees that always help promote the airline. I always see the ❤️ in the planes and know they care for the passenger. Please don’t change too much and just become another airline.
Southwest is the largest domestic airline connecting many city pairs without needing to go through a hub. People will complain, but won’t leave the Southwest ecosystem if non stop flights are available and the cost differential isn’t that significant compared to a legacy carrier.
I’m sorry that Southwest is losing their way and becoming like the three other big USA airlines because a lot of the people who like them now will be looking for another airline. This may be good news for other airlines that are struggling. I will be flying on JetBlue in October and will see if they are still providing the great service I have got from them in the past.
I prefer the open seating because I don’t want to sit next to the smelly person or screaming kid. Elliott is ruining the Southwest brand and shaking loyalty. If they start charging for seats and bags, why book with them?! Just use google flights and find the cheapest rate because there’s nothing that differentiates them from the competition at that point.
Do like most airlines do and start checking bags on the last boarding group.
Have someone REALLY monitor the bags on boarding meaning another agent assisting the boarding agent to check oversized bags
I have been in the airline industry for 42 years (now retired) and Southwest has been too lenient on their policy
No one even talks about what will happen when booking flights with points. I accumulated points in good faith that I would not have to pay for luggage. I hope that SW lets us take at least one free checked bag.
Southwest is changing its strong brand if any of these changes come to pass.
Loyal SWA flyers will no longer choose SWA as their only choice.
There WAS no better airline. Herb is rolling over in his grave.
With those changes then why fly Southwest?
SOUTHWEST is the only airline I will use. They fly most routes I travel, checking in and boarding is easy, and no assigned seats allows visual selection who I sit next to.
Some posters on herr are flat out wrong
Southwest drives fare sales and price wars for early booking of 45+ days out.
Them becoming just like the others hurts them significantly
No more bag fees, no more free seating, no more loyalty, no more me! I will go for whoever is the cheapest now.
When SW passengers were polled, the conclusion was that people wanted assigned seating. The free-for-all seating is the reason that I and many people won’t try Southwest. Most people don’t like change. That’s human nature.
Ruination of a great airline
Southwest has a loyal following and refuses to charge for baggage. Elliott will suck the company dry and ruin them, making SW charge for every single thing.
I also expect a swift review of “non profitable routes” and some cities perhaps losing service entirely or greatly curtailed”.
I fly SW because of the most direct flights, free baggage, unassigned seating & most of all cheaper fares. Now if the new plans are implemented they will become like the other airlines & they will start losing loyal customers one by one.
Well maybe when the dust settles they will be ripe for a merger.Could be great for the investors.
I fly Southwest because of the free bags and have their credit card because of their flexibility and their rewards programs… they have always been my airline of choice! Now with having to pay for a checked bag assigned seating which with my credit card i had 4 free upgrades to A list seating which will now go away. I’m seeing all the perks i love about southwest disappear and if this is true about charging more for basic economy they will be just like every other airline and I’ll gladly shop around for the cheaper flight. I travel a lot for work and i usually go out of my way to fly with southwest but they make these changes I’ll fly the cheapest way i can
They better be prepared to update their jet fleet. All the regular airlines have roomier seat space & charging stations for electronics on board. That matters to me when I’m flying all day. SW fleet is old & outdated.
the absolute first thing to go: SW seat pitch on most of the 737’s, 32-33″. AA, 30″. DL’s 737-800’s, 31-32″. United: 31″.
Elliot will run Southwest into the ground, suck out every bit of profit they can and then leave a smoldering husk in their wake. I have been flying with SWA for almost 30 years and they had already started down the road of becoming “just another domestic airline” with their fare prices. Now, with assigned seating, there really is no draw for the loyal, Southwest customers who have become used to this practice and their culture.
How will A-List be handled going forward?
How will upgrades by having the credit card be handled?
How will seat pitch be effected by offering a “premium” seat (on a 737??)?
Elliot will be the death knell of Southwest and, frankly, it’s just symptomatic of all of the greed going on today. Sad.
Back to Delta.
I, as a rule, always fly on Southwest. While having assigned seating is not a bad idea, charging for bags is. At least one free bag and a carry on. If this changes I will consider other airlines without hesitation as there won’t really be a difference.
When all is said and done, what will make Southwest stand out from any other carrier? Say, Eastern?
I’ve flown Southwest exclusively since 2008. When they do away with open seating, I will continue to fly Southwest -until I use all loyalty points. After that, I will make my decision based on schedule, price and airport instead of driving 2 hours to fly Southwest.
I fly SW 40+ segments a year. I choose SW over the other guys because I personally like how they currently handle boarding. I fully intend on changing to another carrier once seats are assigned. End of an era.
Unfortunately, Southwest is showing that it could careless about its customers. Especially the loyal customers who refuse to fly with the other airlines. I am one of those. I won’t even consider the other airlines, I love the perks my credit card gives, along with open seating and bags fly free. I’m not sure I will fly with them going forward. Such a shame greed is winning out over loyalty.
Too bad! It had been our airline of choice due to all the things they want to eliminated. Greed is Karma’s enemy. We will be going to United, America or Delta. This is BS!
I have 100,000 points left, anyone interested in buying them? I have one flight booked, then I’m done.
The carry-on issue is because SWA gate personnel categorically do not hold passengers, or themselves, responsible for excessive numbers and sizes of carryons, leading to constant chaos on board. Flight attendants have, many times, told me so. This is the same way on each and every single Southwest flight, it’s the norm, and this is how SWA will “fix” the problem.
Open seating and two free checked bags are two attributes that make Southwest Southwest. I’m not happy about Southwest going to assigned seats but I could live with that if I must but if Southwest starts charging checked bag fees, I would have no reason for flying Southwest…unless the “all in” price for the air ticket and checked bags is less than or equal to all the other carriers flying whatever itinerary I may need to fly. Oh yes, schedule would be another factor as I absolutely HATE red eye flights as well any connections that are too short (in case of first flight being late causing possible misconnection) or too long (spending say over four hours waiting for the next flight).
While some changes were needed in today’s market compared to 20-30 years ago, Elliott has no concept of what made Southwest travelers loyal and some of the proposed changes will no doubt have an adverse effect on loyalty, whatever was left of it. Sad.