Southwest Airlines has been the most consistently profitable airline in the United States for decades. Coming out of the pandemic, though, they’ve struggled. There are two basic reasons why.
- Southwest hasn’t had the flights people wanted to buy. The airline flies largely domestically, with some close-in international. They haven’t been able to take advantage of the boom in long haul international. They don’t even have partners to sell flights on that would help here.
The airline only flies Boeing 737s. They can’t take advantage of demand from small cities. There’s been too much domestic capacity, and that’s hurt domestic-focused American Airlines. But American Airlines has regional jets that connect passengers out of small towns and fill up larger planes, while Southwest Airlines can’t.
- Southwest hasn’t had the product people wanted to buy. The past couple of years air travel has seen significant growth in premium demand. But Southwest doesn’t have extra legroom seats or first class. They don’t have lounges. Their business model was built to be efficient and egalitarian.
They have several strategies to address their deficiencies. None of them address their fleet limitations, that don’t allow them to serve smaller or farther-flung destinations. They’ve toyed around with partnerships and codeshares that would allow them to sell more destinations but that hasn’t been part of the recent narrative.
What the airline is doing is trying to get customers to spend more, in part by flying their current planes more and in part by shifts in their product. These are likely to offer mixed results.
Assigned Seats
This is a huge break for Southwest Airlines. I expected they would offer some premium seating, and that this would require assigning those seats, but that they would keep boarding groups for the rest of the cabin. That’s not the direction they’re going.
Currently Southwest sells Early Bird check-in, which means earlier boarding and better seats. They earn hundreds of millions of dollars from this product. And their most expensive Business Select fares come with the first 15 boarding slots on a flight. That’s the reason to buy up. So monetizing seat assignments isn’t all revenue upside. It’s unclear how much it will contribute to the bottom line.
However the airline recognizes that while their seating method is beloved by some, it also keeps many others away from choosing the airline. I don’t like queueing half an hour before my flight. I’d prefer to board at my leisure and have my chosen seat.
On the other hand, though, the current seating strategy means that most seats are available when you board. On competitors, the best seats are often booked up weeks prior to travel. If you make last minute travel plans, or change your travel plans, you have a shot at a better seat on Southwest but often not on competitors.
Southwest’s current boarding is also highly efficient, getting people queued and onto planes quickly. It supports their quicker turnaround times and in turn makes their aircraft utilization more efficient. That saves them money – the cost of several planes a year.
Assigned seats will appeal to some, not others, and comes with real inefficiencies. So it’s an open question how this plays out.
Of course there are two other huge advantages seat assignments will bring,
- The end of seat saving. No more claiming 13 seats for your group or using a bag of donuts to claim a whole row of seats, and the ensuing conflict that comes from taking more space than your ticket allows.
Woman saving an entire row of plane seats behind her with donut bags.
byu/Hog_Fan inmildlyinfuriating - The end of Jetbridge Jesus flights where dozens of passengers board in wheelchairs, to get on first have their first pick of seats, but walk off just fine at the end of the flight themselves. This won’t just promote fairness, but will stop hogging wheelchairs and staff time pushing those chairs to make them more available for those that really need the assistance.
A friend shares a not-uncommon sight from Puerto Rico:
55 "handicapped" during pre-boarding, including 25 wheel chairs
On his return flight, 15 used wheelchairs to board, only 1 to deboard pic.twitter.com/gHgIsnzsq7
— Bachman (@ElonBachman) February 19, 2023
Another flight on @SouthwestAir, and I’m happy to report being witness to more miracles. These poor souls came seeking a flight, and instead were healed. 🙌🏻🙌🏻
Always grateful for witnessing the miraculous healing power of flight. pic.twitter.com/7TCYn2T6BB
— Dave Ruminates (@dave_ruminates) April 5, 2023
With one simple change – assigned seating – you’ll solve many of the problems that turn boarding a Southwest Airlines flight into an exercise in game theory.
Premium Seats
The reason you want to board earlier and select your seat is to get a better seat. That may just mean an aisle seat, but it can also mean one nearer the front or one that offers more legroom.
And for longer flights especially knowing you’ll have enough space to open your laptop and work matters, or just not to feel squished.
Southwest hasn’t been able to meet market demand for this. I’d certainly prefer extra legroom coach over non-extra legroom coach, either via my status or even paying (a reasonable price) for it.
This makes sense, and it requires some element of assigned seating or else early boarders would just take the best seats. Everyone would fake a wheelchair-requiring disability!
We don’t yet know whether the premium seat product will come with other benefits, like free drinks or upgraded snacks?
Less Space For Non-Premium Seats?
Adding premium seats means giving more space to some seats and that space has to come from somewhere. You can remove rows of seats, and potentially sell fewer tickets. Southwest could do that with their lower load factors, but trying to appease Wall Street that seems unlikely.
Currently Southwest and JetBlue offer the most space per passenger in regular coach of any airline, up to a couple more inches at every seat compared to Delta, United and American. They really do not promote this.
They also are introducing new seats that appear firmer and less padded. That offers the potential of some additional space in the cabin. There is a strong likelihood that premium seat space comes at the expense of space in the rest of the cabin.
Redeye Flying
Southwest Airlines is introducing redeye flying, and has added flights into its schedule starting in February such as
- Las Vegas – Baltimore, Orlando
- Phoenix – Baltimore
- Los Angeles – Baltimore, Nashville
Los Angeles – Baltimore at Southwest.com
This makes sense. First, they already have the planes, so the additional overnight flying is relatively inexpensive. They need to pay for crew and fuel, but they’ve added this flying into their labor contracts. Second, it allows connections and destination pairs that weren’t previously possible. Southwest is big in Hawaii, but without redeye departures from Hawaii they’re limited to mostly passengers between Hawaii and the West Coast. They can’t fly passengers from Hawaii to Texas, for instance, without an overnight.
It’s not a panacea, and this is likely to be lower-yield revenue overall on these flights. Cheap overnight seats could also compete down the fares they’re able to get on other service. But it makes sense.
Will They Do Basic Economy?
Southwest’s core value proposition has been ‘Transfarency’ that they don’t nickel and dime you. Before the majors went along, they had no change fees (but you do pay a difference in fare when changing flights). They don’t charge for up to two 50 pound checked bags. Now their flight credits don’t even expire.
The airline hasn’t had a basic economy product – everyone has had access to the same fares regardless of the experience they wanted to buy. They didn’t price discriminate between price-insensitive business travelers and price-sensitive leisure travelers. And they have used only incremental benefits of more expensive fare types to try to get customers to spend more.
There’s been much discussion of the likelihood that they’ll impose basic economy. They might even preserve free checked bags… but only one, rather than two. They could limit full-sized carry-ons like United does. They could make seats available for assignment only at check-in. And they could make fares non-changeable. Basic economy is an idea that’s been pushed by activist investors who took a nearly $2 billion stake in the airline, and who are pushing for a change in leadership.
Will Assigned Seats Devalue Companion Pass?
The best value benefit in travel is the Southwest Airlines Companion Pass. Regular flyers, or those earning substantial points through their co-brand credit card, can bring someone with them for just the cost of taxes. If there are two seats for sale, that second one is virtually free.
And Southwest’s elite members get to extend their earlier boarding privileges to their companion. That means they currently get the best seats for both passengers at no extra cost.
In a paid seating arrangement, where elites may not have access to all of the paid seating options free, what happens to companion seating? In other to sit together, and sit together in better seats, will the companion need to pay a seat fee? If so, the companion cost might go from just security taxes to security taxes plus the cost of preferred seating – making companion travel more costly, and the companion pass less valuable.
What Benefits Will Elite Status Offer?
To offer elite benefits comparable to domestic competitors like American, United and Delta, elite members will need some access to complimentary assigned seats – perhaps not premium seats, at least until check-in if still available – but some seating benefit.
And top elites should have access of some sort to premium seats, whether in advance or subject to availability at check-in. We don’t know yet the extent to which this will be offered.
Southwest is currently offering elite status for sale through end of next year, and promoting an earlier boarding position, which people buy precisely to get the best seats. Surely they can’t pull a bait-and-switch.
- Maybe they haven’t thought through this in their rush to respond to activist investors, but they are promising priority boarding so does that mean there will still be a priority boarding lane? I don’t see why not.
- They are selling the status benefit of better seats, taking in up to a couple thousand dollars per customer for this, surely that status still has to come with the benefit of.. better seats, and so status will get some free seat assignment benefit.
Will Southwest still offer to sell earlier boarding? If they keep free checked bags for everyone, even basic economy, the only reason left to board early (since it doesn’t gain seat choice) is overhead bin space but in general Southwest has less of a problem with that since passengers don’t try to haul all their belongings on to save on bag fees.
Which Direction Southwest?
We’ll get some color during the Southwest Airlines earnings call today, but for the most part aren’t likely to learn the answers to key questions at least until their Investor Day this fall and then closer to the launch of changes early next year.
They need to take care not to lose the value proposition that does still distinguish them, and for which the market continues to value their business at a higher multiple than competitors, even as they work to provide a product that more people want to buy and to pay more for. But they also need to address their inability to sell small town and long haul flights through partners in order to continue to grow.
*sigh*
We’ll see how this plays out, but it genuinely saddens me to lose a differentiated market offering.
I do personally believe this is Southwest losing its soul.
I should add, for clarity, that I also believe this is an enormous financial mistake. Southwest is now selling a largely undifferentiated product from their competitors. I don’t see this doing anything but tanking the stock price in the long run, even if they manage to become profitable again (and I remain unconvinced that Southwest will become profitable because of these changes).
Now they have another problem. Their FF program is overvalued.
AA/AS are now less award miles to fly to their service areas and they have no differential value if they charge for seat selection and move to micro seat spacing. They have become sky pesos meaning who wants to fly on their award seats for more cost and more stopovers. They can counter with 200,000 point credit card offers but it still makes existing points less valuable.
Sounds as if you need a PhD to figure out all of the different Southwest deals and boarding scenarios. I have not found them less expensive on flight we have taken and my credit cards and or business class tickets take care of any charges for luggage. The mass of people taking advantage of wheelchairs is another turn off. I hope Southwest can keep its unique culture but make some necessary changes.
Good, ending free-for-all seating fixes multiple problems with Southwest.
Every other airline has figured out boarding time and Southwest will also.
“ I don’t like queueing half an hour before my flight.”
I do not know why you believe you have to do this. One of those decades-old myths about WN that just won’t die. I’d have thought you would know this.
If I am B15, I watch the boarding process. At about B5, I get up from my gate seat, walk 20 yards, and merge right into my spot.
There is no half-hour standing. Jesus.
@toomanybooks but they are boarding half an hour before the flight.
You may have misunderstood me to be saying that I stand for 30 minutes. That is not what I wrote. I don’t like to get up and get on 30 minutes before.
“They can’t fly passengers from Hawaii to Texas, for instance, without an overnight.”
Not true. They offer daytime flights DAL->HON now.
“Queueing” literally means “standing in line.”
If they sell me the ability to board during pre-boarding, just after the Jetbridge Jesus crowd, a benefit I have with United as a 1K, then I’ll consider going back to them. Not out of O’Hare, though.
I’ll travel the 40 or so miles to MDW rather than enter Terminal 5.
I’ll gladly pay for a LUV Seat on an aisle. My only reluctance is the fact that my last three Southwest flights have gone 3+ hour delay, cancellation, 3+ hour delay. They’ll have to convince me that they’ve solved their performance issues before I return to them (former A-List Preferred here).
I do get a kick when football fans think they know more than the coaches when it comes to play calling, drafting, etc. I find the comments of jamesb2147 in that category. Obviously, the better-qualified-by-far WN heads think this will improve things. But, of course, this is the fun of things like this, so we’ll see if jamesb2147 is right. I think they found something like five out of six passengers wanted assigned seats.
Southwest will have to become like the other three big airlines to survive. I wonder where they will get the twin aisle jets for international routes.
Oh wow, I too had thought that assigned seating would be just for the front of the cabin and not the entire plane. Will let people much smarter than me crunch actual numbers but I agree losing out on the early bird checkin etc takes out a big chunk of the potential financial benefit of assigning seats.
Once the free check-in bags are taken away I think Southwest will have completely lost its soul and ability to differentiate but I think it still holds onto it for now, barely
Herb must me spinning……….
@ Gary — This will be great for ATL fares. Lots of ATL DL fliers may now consider flying WN, which will put downward pressure on fares.
L3 says:
July 25, 2024 at 10:54 am
“They can’t fly passengers from Hawaii to Texas, for instance, without an overnight.”
Not true. They offer daytime flights DAL->HON now.
@L3….go back and read what you wrote.
Gary wrote HAWAII TO TEXAS
You countered with a TEXAS TO HAWAII
Two different things…and Gary is correct
What Ajay says! Plus I thought they were only going with upfront seat assignment too not the entire plane. Ugh.
I will fly them more if and that’s a big if the assigned seating is somewhat reasonable
If I buy a flight for 150 and they charge 100 for the assigned seat prob not
I’d likely fly AA or Alaska possibly Untied Airlines
The good news is likely the wheel chair brigade may go onto greener pastures at
premium carriers like Spirit and Frontier 😉
Any indications that this is also in response to the difficulty that law enforcement has had in identifying and removing passengers from Southwest flights because they don’t know exactly where the person is sitting? Or the trouble that Southwest has apparently had with unticketed passengers boarding (how they do this I have no idea), filling the plane and thus denying a seat to a ticketed passenger? I’ve read that both scenarios require everyone to deplane and then re-board.
This makes me sad, but I suspect will result in cheaper tickets over time.
Why would it result in cheaper tickets?
Looks like reserved seats are expected sometime in 2025 ?
@Steve:
Depart Honolulu (Oahu) (HNL) on Flight 2122 at 7:00 AM
(1 plane change with 1 stop)
Arrive in Dallas (Love Field) (DAL) at 10:20 PM
God you are stupid.
@MAB – no indications of that
@L3
You a Tim Dunn handle? Seem to quickly hit the “insult” button when you’re called out.
Again, go back and re-read what you countered the argument with.
Although I love seeing an end to handicap scammers, long over due. The seat assignments are nothing new. How will Southwest stack up to its competitors remains to be seen. They say they are listening to customers request but is it really or are they givening in to projected margins of greed?
I predict that reserved seats won’t increase revenue. Selling those seats simply offsets the revenue lost from passengers purchasing Early Bird, etc.
If they’re going to make a change, be more bold. Instead of rows with extra leg room….actually add a premium economy section.
@Steve: I’m helping you. You are prattling nonsense. Your parents raised a vegetable!
Honolulu to Las Vegas – WN 2122
Las Vegas to Dallas – WN 4708
I do a pretty good amount of business and personal travel and I’m a 1K on United. I live in Sacramento and my life would be exponentially easier If I flew SW, but I just can’t. I can’t worry about whether I’ll have a decent seat or whether I’ll be disturbed by a bunch of Carnival Cruise Liners when I’m trying to get to a meeting or a convention. It may seem classist, but I also like how United and other legacy carriers basically have the business up front (Economy Plus premium seats, 1st class), and the less premium and basic economy fares in the back. It just means there’s a more curated experience and fewer wild cards.
These changes could potentially help, but I also like that you have some level of rewards and comfort by being loyal to someone like United, even though some of what they do drives me nuts. Plus I can use PlusPoints to potentially upgrade to Polaris to Europe. Huge deal.
Ok L3…since you seem to not want to go back up there and read what you posted, I’ll help you out.
Gary posted:
They can’t fly passengers from Hawaii to Texas, for instance, without an overnight.
You posted:
Not true. They offer daytime flights DAL->HON now.
Again…Gary wrote HAWAII TO TEXAS
You countered with a TEXAS TO HAWAII
You countered with the wrong argument…then double backed to correct yourself…and threw out ad hominem attacks in the process.
It seems to me that you seem to lack internetiquette…do better!
Definitely looking forward to today’s simple boarding process turning into groups 1 through 9 plus uniformed military members and family boarding. It’s going to be just great flying basic economy too! American Airlines has such a great strategy, copying it will totally work.
I love the current unassigned seating and boarding process. Very unhappy about the changes coming. My status as A preferred is sure to diminish in value as will the companion pass perks. IMO,
big mistake SWA.
SW biggest weakest in my opinion is their frequent flyer program. It gives me 0 incentive to fly them cuz why put all my money in them when their miles/dollars don’t count towards my flight to a business class upgrade or an award ticket to Asia. For that UA gets my business. I can’t tell you how many times I’ve flown SFO to SYD on an AWARD ticket.
It really should be a crime to make fraudulent requests for disability accommodation. (the liars should also face lifetime bans.)
Actual consequences would get rid of Jetbridge Jesus for once and for all.
No need for a felony though – a misdemeanor would suffice for this.
@Steve: You are so stupid.
I’ve always cringed imagining what a nightmare flying from MCO/Orlando (Disney World) via WN must be. After pre-boards, even the early “A” group tickets are probably looking at middle seats? Any stories?
When flying domestic, I typically use DL or WN. They both suck for different reasons. My experience with flying international on foreign carriers (especially to/from Asia) has always been immensely more comfortable and enjoyable. There is simply no comparison.
The changes WN announced will very likely push me to using DL almost exclusively. The only edge WN appears to retain (which likely will disappear shortly) is the 2-free checked bag policy.
I continue to submit that the only way public commercial air travel will improve is to require ALL politicians to fly with their constituents in economy/ cattle class. No private jets, first class/premium upgrades– just plain economy class. Once that is the law, airlines will magically make economy seating comfortable overnight and the rest will fall into place.
Southwest doesn’t have business class, meals, tv screens, and has a limited network/fleet that can’t really get you too many places internationally.
When people pay for an upgrade they are mainly looking for a business class seat especially internationally. Just a little bit of leg room isn’t noteworthy imo that is essentially what Spirit is already offering.
They will probably have to merge with another airline long term.
The biggest reason I choose Southwest personally, and for work when it’s an option, is because of the higher seat pitch. Seat pitch makes a huge difference in comfort for me. And I’ve never had significant issues with Southwest boarding. If premium seating at Southwest comes at the cost of the inhuman seat pitches of other airlines, and with a price tag similar to the other airlines, I certainly won’t have any incentive to fly with them over another.
“@Steve: You are so stupid.”
Yeah, that makes sense. He’s “stupid” because he pointed out your mistake.
I currently fly WN from BWI to PHX, monthly. I have been doing this route for 4 years. I am an A-List customer and I’ve never had a bad experience on Southwest. I know that I can pay for an upgraded boarding position if I want, though I’m normally in the first half of the A boarding group. Even with the pre-boarding people (both scammers and legitimate), I’m almost certain to get an emergency exit row seat. However, this past year, I have noticed that ticket prices on Southwest are not always cheaper than DL, UA and AA.
Getting rid of the open seating It’s going to push a lot of us to other airlines. The reason is simple: if I am a frequent traveler on Southwest and their prices for their lowest fare (presumably the equivalent of their economy) are similar to The Big Three, why would I pay suddenly start paying less for the economy equivalent and not getting the economy-plus equivalent of early boarding? I suspect a lot of Southwest loyalists will leave the airline and fly with more competitively priced DL, UA, AA.
Also, this is really not a change of culture, per se. It is the result of the investment group that owns 11% of their stock trying to raid the airline for quick profits and then, I’m sure, leaving it to take its last breaths. This investment group is well known for jumping in, raiding the coffers of a company and then leaving behind a husk.
I think Chase will also lose a lot of Southwest cardholders (like me) come next year.
Random thoughts: I used to fly WN frequently “back in the day,” but as I have gotten older, I have come to value assigned seats and lounge access more and more. This doesn’t mean that I *won’t* fly WN, only that I prefer to fly other carriers. That, and as Gary points out, WN has a distinct *lack* of partners with international long-haul (i.e.: Europe and Asia) destinations, and therefore Rapid Rewards don’t go as far as points/miles on other carriers.
On another note, @Gary mentioned, “Cheap overnight seats…” I don’t know how many people remember the old *original* PSA (Pacific Southwest Airlines), but back in the 1960s and early 1970s, your typical ticket between LA and San Francisco cost $19.99 (IIRC), but PSA has the “Midnight Flyer,” where we would fly between the two cities for a whole $10. I wonder how much WN will discount their overnight flights…if at all.
With the seat assignment, there’ll be some sense of organization with a little more respect of each other and not selfish, by grabbing any seat.
The argument that open seating allows for faster turn times became obsolete many years ago, in fact this change is in response to the fact that the old boarding process is too slow. The first to board currently block the aisle to put bags in the overhead, impeding the flow for the rest of the cabin. Additionally every additional body on the aircraft creates an additional fuel burden to factor into the cost of the flight. Fewer passengers, as a result of added legroom for instance, means a slightly cheaper cost for the airline in terms of fuel burn. They may also be making room, in terms of weight, for more lucrative cargo on the flights.
Within 3 years SWA will be an airline like any other domestic airline monetizing everything. Pay for a ticket, pay for when to buy a seat with the price increasing overtime, pay for the actual seat selection montized to desireability and demand, pay for boarding order; pay for a snack and pay for a drink of water, soda or alcohol; pay for each checked bag and each carry-on bag except for small purses (8x8x3 inches)… yes, that is the forecast. And they will merge with Spirit Airlines.