Southwest Airlines ends open seating after 50 years as it overhauls travel policies

Southwest Airlines has announced plans to abandon its open-boarding system, a feature of the airline for over half a century. The company will now assign seats to passengers.

The decision comes after extensive research into seating preferences, including customer surveys and test runs. The airline found that the majority of travelers now prefer to know their seat assignment prior to arriving at the airport.

Southwest's unique boarding process was initially designed as a quick method to load passengers and minimize idle time on the ground, thereby increasing efficiency and profitability. This approach contributed to Southwest being the only US airline to maintain profitability every year until the Covid-19 pandemic hit.

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The current system works by allowing customers to check in exactly 24 hours before departure to secure their place in the boarding lines. Initially, the first 30 to check in were placed in the desirable "A" boarding group, ensuring them a window or aisle seat.

Latecomers would be placed in either the "B," group, which was still acceptable, or the dreaded "C," group, often resulting in a middle seat.

Southwest Airlines is shaking things up, moving away from its open seating policya move that's sure to ruffle some feathers among its die-hard fans. CEO Robert Jordan, speaking to CNBC, acknowledged the potential backlash: "I know there are going to be customers who say, 'I want to stay with open seating.' It's a minority," but he remains confident they'll come around, just as they did when the airline ditched plastic boarding passes and peanuts.

The company has done its homework, revealing that surveys indicate a whopping 80% of its current customers and 86% of "potential" customers prefer assigned seating. Jordan also pointed out that the lack of assigned seating was a major factor for travelers opting for other airlines.

But that's not all. Southwest is also introducing premium seats with extra legroom, a feature that's already standard on other major US carriers. The airline is rolling out redeye flights starting mid-February, connecting cities like Las Vegas, Los Angeles, and Phoenix to various destinations.

These bold moves come as Southwest faces pressure from Elliott Investment Management, which criticizes the airline for not keeping pace with competitors and has called for new leadership, targeting both Jordan and Chairman Gary Kelly.

Southwest Airlines has been put under the microscope by the Federal Aviation Administration following a string of alarming incidents, including a harrowing moment when one flight plummeted to just 400 feet above the ocean near Hawaii. Other flights have been caught flying dangerously low before landing in Oklahoma and Florida, and one aircraft experienced an unsettling "Dutch roll" motion, later found to have damage in the rudder area.

On the same day as revealing these operational changes, Southwest , along with American Airlines, disclosed a significant dip in second-quarter earnings despite an uptick in revenue.

The airline industry is currently grappling with soaring costs and diminishing fare control, particularly for domestic US flights, as the number of flights outpaces the rise in travel demand.

Dallas-headquartered Southwest reported a 46% decline in second-quarter profits, down to $367 million, attributing the drop to increased labor, fuel, and other expenses which eclipsed revenue gains. The figures aligned with analyst predictions.

American Airlines also saw its profits tumble by 46%, landing at $717 million, and projected a break-even third quarter, falling short of the anticipated 48 cents per share profit for the July-to-September quarter.

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American Airlines CEO Robert Isom admitted, "did not perform to our initial expectations" due to a now-ditched sales approach and an excess of domestic flights. Isom explained that the company is pivoting to a strategy focused on profitability and customer ease, stating, "makes it easy for customers to do business with American."

The airline has also revised its earnings forecast, now expecting full-year profits in the range of 70 cents to $1.30 per share, a significant drop from the previously anticipated $2.25 to $3.25 per share.

Investors seemed unfazed by the news, as shares in major US airlines climbed post-opening bell on Thursday. Southwest Airlines Co. saw a 3% increase, while Fort Worth-based American Airlines Group Inc. enjoyed a 5% boost in late-morning trading. Other carriers including Delta, United, Alaska, and JetBlue also experienced gains.