Southwest Airlines Drops Open Seating

Southwest Airlines is about to start assigning seats on flights and sell some with extra legroom. The changes are being made in an effort to appeal to more passengers who skip it for other airlines like Delta, United and American. Additionally, the plan will serve as a way to fend off an activist investor who is pushing for an overhaul of the airline’s leadership and operating strategy.

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Open seating has sort of been Southwest’s calling card since it started operations over a half-century ago, according to the Washington Post. That business model, which was unique among major carriers, produced decades of uninterrupted profits and democratized flying while doing so. For the most part, people seemed to really like it, but alas, all good things must come to an end.

Here’s what the Wall Street Journal reports about the decision to end open seating:

But Southwest executives said the company needs to adapt to what today’s customers want, marking what may be its biggest-ever shift.

“This is the right change at the right time,” Southwest Chief Executive Bob Jordan said in an interview.

It isn’t clear when flying with assigned seats and premium rows will start, but Southwest said bookings for them are expected to begin next year. The exact timing of the changes depend on the airline gaining regulatory approval and retrofitting its planes.

It expects to share more details at an investor presentation in late September. Southwest also plans to operate red-eye flights for the first time starting next year.

This move comes as profit margins continue to lag behind competitors, and it pulls back from new cities it entered into during an expansion strategy a few years ago.

Southwest also just reported a second-quarter profit of $367 million, which works out to a 46 percent drop from the same time last year. That news came despite record quarterly operating revenue.

Elliott Investment Management, an influential hedge fund that has amassed a $1.9 billion stake in the company, has criticized the airline for being slow to adapt to modern flying. Elliott wrote in a letter to Southwest’s board that changes it has been contemplating are too little, too late, and that many investors have lost confidence in the airline’s leaders.

Southwest said it started studying potential changes last fall, before Elliott in June disclosed its stake in the airline.

Jordan declined to estimate exactly how much extra revenue the airline’s new initiatives will bring in, but said he expects it to be “significantly north” of the nearly $1 billion Southwest currently generates selling extras like those that allow passengers to board sooner.

Southwest is rolling out a whole new boarding plan to go along with its assigned seating, according to the Journal:

Southwest’s plan eases pressure on fliers to check in precisely 24 hours in advance or to pay extra to get a good spot in queues at airport gates.

Fans of the airline have said they loved open seating. When flights were emptier, they could often land a window or aisle seat. That is happening far less frequently though, as planes are more packed.

The airline said it surveyed thousands of customers to understand what they want and what they would be willing to pay for. It found that 80% favored assigned seats—an overwhelming share that Jordan said took him by surprise. “Our customers really, really, really want it,” he said.

[…]

Currently, Southwest’s boarding procedure involves sorting customers into three groups (A, B or C), assigning them a number, and calling for them to line up in order. Passengers who pay for boarding and check-in upgrades, have elite status or pay for pricier ticket options can improve their position.

To test out different boarding methods, Southwest enlisted employees along with their families to practice getting on and off planes over several days in Houston. The passengers were loaded up with carry-ons and strollers, and some used wheelchairs. They tried different boarding and assigned seating configurations to determine whether assigning seats would slow things down—one reason the airline previously opted not to do it.

I’ll be honest folks, I’ve never flown on Southwest, so I can’t tell you if this sounds like a good thing or a bad thing. That being said, I know people who fly Southwest regularly, and they all seem to love the idea of open seating. I don’t know. I sort of like knowing where I’m going to be sitting before I’m on the plane. Open seating feels a little bit too “Lord of the Flies” to me.

What do you folks think? Was this a good move by Southwest, or is it getting rid of the one thing that made it really unique among U.S. airlines?