DALLAS- The World’s leading budget carrier, Southwest Airlines (WN) announced today that it will introduce Assigned and Premium Seating to enhance customer experience. It is a move to improve revenue amid flat financial results.
Extensive research and customer feedback drove this decision. Southwest found that 80% of its customers and 86% of potential customers prefer assigned seating. Open seating was identified as the primary reason customers switched to competitors.
Southwest Offering Assigned and Premium Seats
Dallas-based is making a major shift in its seating policy, moving away from its signature open seating model after more than 50 years. The airline will now assign seats and offer premium seating options on all flights, responding to evolving customer preferences and market demands.
The new seating model includes a premium section with extended legroom, expected to cover about one-third of the cabin.
Southwest conducted thorough operational testing, including over 8 million simulation-based boarding trials, to ensure the new system maintains efficiency. The airline is confident these changes will meet customer expectations without compromising operations.
This seating overhaul is part of Southwest’s broader modernization efforts. Recent improvements include faster WiFi, in-seat power, and larger overhead bins. The airline is also working on a refreshed cabin design featuring new RECARO seats for enhanced comfort.
Southwest plans to provide more details on these changes and other commercial initiatives during its Investor Day in late September.
Bob Jordan, President, CEO, & Vice Chairman of the Board called this move transformational.
Moving to assigned seating and offering premium legroom options will be a transformational change that cuts across almost all aspects of the Company.
Bob Jordan, President, CEO, & Vice Chairman of the Board
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. We are excited to incorporate Customer and Employee feedback to design a unique experience that only Southwest can deliver.
We have been building purposefully to this change as part of a comprehensive upgrade to the Southwest experience as we focus on Customer expectations – and it will unlock new sources of revenue consistent with our laser focus on delivering improved financial performance.”
Redeye Flights
Southwest Airlines expands its service with the introduction of overnight, redeye flights, marking its transition to 24-hour operations. This significant change begins on Valentine’s Day 2025, with initial routes connecting major cities across the United States.
The first overnight flights will operate on five nonstop routes: Las Vegas to Baltimore and Orlando, Los Angeles to Baltimore and Nashville, and Phoenix to Baltimore.
This move to redeye flights is part of Southwest’s multi-year transformation plan. The airline aims to gradually increase its overnight flight offerings in future schedules, expanding its round-the-clock service capabilities.
Southwest expects this new service to generate additional revenue and cost savings. By implementing redeye flights and reducing aircraft turn-time through new technologies and procedures, the airline plans to fund nearly all new capacity over the next three years without significant aircraft capital investment.
New EVP
Southwest major changes to its business model were led by Ryan Green in his new role as Executive Vice President of Commercial Transformation. Green, formerly Executive Vice President & Chief Commercial Officer, will spearhead the development and implementation of new commercial initiatives.
Green’s experience includes transforming Southwest’s Rapid Rewards® loyalty program and digital customer experience. He now reports directly to Bob Jordan, President, CEO, & Vice Chairman of the Board.
Gary Kelly, Executive Chairman of the Board, expresses full support for these changes. He emphasizes confidence in the leadership team’s ability to create a unique experience that honors Southwest’s legacy.
Q2 of 2024 Financial Results
Southwest Airlines reports record-breaking financial performance for the second quarter of 2024, achieving all-time highs in passengers carried, passengers revenue, and ancillary revenue.
Despite these records, Southwest experienced a 3.8 percent decline in unit revenue compared to the second quarter of 2023. This decrease stems from industry-wide domestic capacity growth outpacing demand and an estimated two-point headwind from revenue management challenges.
The airline sold an excess number of seats for the peak summer travel period too early in the booking curve, impacting revenue. However, Southwest’s commercial actions, including network optimization efforts and Global Distribution System (GDS) maturation, provided over three points of unit revenue benefit.
Second-quarter unit revenue slightly exceeded the company’s previous expectations, aided by resilient operations during severe weather events in late June. Southwest benefited from incremental bookings due to other carriers’ cancellations.
Looking ahead, Southwest projects third quarter 2024 unit revenue to range from flat to down 2 percent year-over-year, with capacity increasing by approximately 2 percent.
Fleet Update
Boeing’s delivery delays are shaking up Southwest Airlines’ fleet plans for 2024. The airline got five new 737 MAX 8 planes in the second quarter but said goodbye to six older 737-700s and one 737-800. This leaves Southwest with 817 planes right now.
The company’s talks with Boeing aren’t over yet. Southwest thinks it’ll only get about 20 new MAX 8s this year, way less than what they ordered. They’re sticking to their plan to retire 35 planes in 2024 – 31 of the 737-700s and four 737-800s. If everything goes as planned, Southwest will end the year with around 802 aircraft.
Southwest hasn’t changed its flight schedule yet, but they’re keeping a close eye on Boeing’s production issues. They’re ready to make careful changes if needed. The ongoing aircraft delivery problems are forcing Southwest to stay flexible with its fleet strategy for the rest of the year.
What are your thoughts on the new seating policy and financial outlook? Let us know in the comments.
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