Southwest Airlines is considering making major changes to its seating procedures.
Chief Executive Bob Jordan said Thursday that the airline is studying “conversion options” around its single-class, open-cabin format, as the airline looks to form new revenue streams and Enhance existing revenue sources.
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Speaking on an earnings conference call with investors and the media, Jordan and other airline executives were intentionally vague about possible changes, noting that they were studying Research customer preferences along with the operational and financial impact of any changes that may occur.
“We remain committed to the best customer-friendly policies in our industry, but we are also committed to understanding and meeting customer expectations,” Jordan said.
However, Jordan is more definitive about two things.
First, while Jordan hasn’t completely ruled out adding a separate first class or other type of premium cabin, don’t hold your breath.
“Southwest Airlines – we will always be honest, no matter what we do, to the brand and who we are and how we reach our customers,” Jordan said. “I think the curtains and things like that are a little different from what Southwest has,” referring to the curtains that often separate first class seats from economy on other airlines.
“The products we bring to market today have worked for us for over 50 years, and customers understand who we are and what we offer,” Jordan added. “We’ll study it all, but at the end of the day, we’ll stay true to who Southwest is.”
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Second, despite looking for new revenue opportunities, Jordan flatly rejected the possibility of charging additional checked baggage fees (Southwestern allows all passengers to check two bags for free). Free checked bags are so valuable in differentiating an airline’s brand, Jordan said, and customer research has shown that this benefit drives a significant number of checked bags. free of charge. Passengers choose airlines than alternatives.
Still, Southwest’s seating is also a significant differentiator for the brand, but it may be time for a change, Jordan said.
Southwest’s current model does not assign seats but instead enforces a structured boarding order, allowing the first passengers to board the plane to choose their seats.
Related: Southwest Airlines reveals new seats, cabin design
Jordan said these changes are being considered in an effort to increase revenue and market share. The airline lost $231 million in the first quarter of 2024, compared to a loss of $159 in the same period last year.
While it’s common for airlines to report losses in the first quarter as travel demand plummets amid the holiday season and winter and spring school breaks, Southwest’s numbers were higher than forecasts. analysts and its financial results are worse than many companies in the same industry.
One financial obstacle for Southwest is that it has limited opportunities to earn ancillary revenue through upselling things like seat assignments, extra legroom seats, upgrades and more.
Meanwhile, its competitors say a growing share of their revenue comes from such upsells. For example, American Airlines, which also reported a loss Thursday but gave a better-than-expected forecast for the second quarter, noted that revenue from “premium content” — defined as including upsells, Customer loyalty program and partner revenue – made up 61% of revenue in the quarter, up 17% year over year.
Southwestexclusive use Boeing 737 aircraftare also more severely affected by Boeing delivery delays than its peers. The airline said it would cut four cities from its route map as it looks to tighten its network to cope with pressure from Boeing delays.
Jordan said the airline periodically evaluates its services and whether they should be changed, some analysts said. and reporters Also ask about often.
“I’m proud of our product today and our customers love it, but it was designed at a time when lower load factors and higher load factors changed the way operation of options”. “No decisions have been made yet, nothing to report other than we are taking this seriously, but the early signs for both our customers and Southwest are quite exciting.”
Taking a serious look at the changes represents a fairly drastic shift from Southwest’s leadership in a fairly short period of time and reflects how quickly the operating environment can change for companies. Airlines.
Do not miss: Southwest removes 4 cities from route map, will shrink Atlanta and Chicago O’Hare
Last fall, when asked the usual question about seats and cabins at the Skift Aviation Forum, Jordan said “nothing is going on; there is no story here.”
Six months later, everything has changed.
Jordan said that while the airline regularly looks at the surface level of whether any changes should be made, it is now doing deeper analysis and doing so less frequently.
Jordan said: “Six months ago the answer was different because work had really accelerated; That’s the work we’ve been doing ever since.”
“There’s a lot of discussion about cabins and insurance premiums and all that stuff, so it makes sense in terms of time to work on that,” he added.
Jordan and other Southwest executives did not discuss a timeline for any possible changes, but they said more information could be forthcoming in September, when the airline expects organize an investor conference.
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