Southwest Airlines has announced significant changes to its longstanding business model in an effort to address declining profits and a decreasing stock price. The Dallas-based airline will transition away from its traditional open seating model, opting instead to charge a premium for the best seats and introduce red-eye flights, according to an official press release.
Bob Jordan, Southwest’s President, CEO, and Vice Chairman of the Board, emphasized the strategic shift, stating, “We are ushering in a new era at Southwest, moving swiftly and deliberately to transform the company by elevating the customer experience, improving financial performance, and driving sustainable shareholder value.”
The company described these changes as an “evolution” informed by customer surveys, which highlighted shifting traveler needs and expectations.
Southwest Airlines revealed that 80% of surveyed customers prefer to have their seats assigned before arriving at the airport, rather than choosing from available seats upon boarding. The airline plans to implement this new seating model in the first half of 2026. Additionally, Southwest will offer premium seating options for customers seeking extra legroom, while maintaining standard economy seating.
The airline’s popular “bags fly free” policy, which allows passengers to check two bags at no charge, will remain unchanged. This feature continues to be a significant differentiator for Southwest, according to extensive customer research.
Southwest also announced the introduction of red-eye flights in key markets starting February 2025, although specific markets were not identified in the press release.
These changes come as the airline faces pressure to improve its financial performance from activist investor Elliott Management. Southwest’s Chief Operating Officer, Andrew Watterson, informed employees on September 19 via video, according to a Bloomberg report, that the company is poised to make “difficult decisions” to restore profitability. He hinted at “bigger changes for some cities,” clarifying that these would not involve city closures.
The announcement affected Southwest Airlines’ stock price, which saw a 10.06% increase, closing at 31.25.
