In a significant shift from its long-standing tradition, Southwest Airlines has decided to abandon its open seating system.
This decision, the most drastic in the company's 53-year history, was announced in a press release last Thursday. The Dallas-based airline stated that the move was designed to "elevate the Customer experience, improve financial performance, and drive Shareholder value."
According to Newsweek, the announcement came on the same day that Southwest disclosed a sharp decline in its profits. Despite a 4.5 percent increase in revenue, reaching a record $7.35 billion, the company's profits plummeted by over 46 percent to $367 million, or 58 cents a share, in the second quarter. CEO Bob Jordan acknowledged the disappointing performance, stating, "Our second quarter performance was impacted by both external and internal factors and fell short of what we believe we are capable of delivering."
In a bid to enhance customer satisfaction and financial performance, Southwest will adopt an assigned seating system, akin to its competitors, starting next year. This decision was driven by the company's research findings that 80 percent of potential customers prefer an assigned seat. The airline found that "when a Customer elects to stop flying with Southwest and chooses a competitor, open seating is cited as the number one reason for the change."
The current system, which categorizes travelers into three groups, often leads to a frantic rush to check in before the flight. The new structure will assign seats in a manner similar to other airlines, with the addition of a premium seating option offering extra legroom. "Southwest expects roughly one-third of seats across the fleet to offer extended legroom, in line with that offered by industry peers on narrowbody aircraft," the airline stated.
In addition to the seating change, Southwest also announced the introduction of redeye flights. These overnight flights, departing in the evening and arriving early the next morning, are expected to "provide incremental revenue and cost savings." The first of these flights is scheduled to land on Valentine's Day next year.
The airline, under investor pressure to rectify its financial situation, views these changes as crucial. Jordan expressed the company's commitment to restoring its industry-leading margins and historical levels of shareholder returns. He said, "We are taking urgent and deliberate steps to mitigate near-term revenue challenges and implement longer-term transformational initiatives that are designed to drive meaningful top and bottom-line growth."
These changes reflect Southwest's commitment to adapt to customer preferences and market demands, while striving to uphold its financial performance and shareholder value.
Login