Southwest Airlines(LUV, Financial) has announced a timeline for its long-awaited transition to assigned seating, marking a significant shift from its 53-year history of open seating. The airline plans to introduce reserved seat bookings in late 2025, with the option becoming available on flights starting in early 2026.
This change comes as part of Southwest's broader strategy to enhance its service offerings and improve profitability. The company also plans to introduce premium seating with extra legroom, though the timeline for this addition has not been specified.
The decision to move away from open seating is backed by customer preferences, with Southwest reporting that 80% of its customers and 86% of passengers who choose other airlines prefer assigned seats. However, the extended timeline for implementation may disappoint some passengers eager for the change.
In addition to seating changes, Southwest announced plans to partner with foreign airlines, starting with Icelandair in 2024, to offer passengers more international flight options. This move aims to expand Southwest's reach beyond its current limited international offerings.
Despite these changes, Southwest confirmed it will maintain its popular "bags fly free" policy, allowing passengers to check up to two bags at no additional cost. The airline believes this policy is crucial for customer loyalty and operational efficiency.
To boost investor confidence, Southwest also revealed plans for a $2.5 billion share repurchase program. This announcement led to a 6% increase in the company's stock price in premarket trading.
These strategic moves come as Southwest faces pressure from activist shareholders to improve profitability and considers changes to its business model while maintaining its core customer-friendly policies.
