Southwest Airlines on Thursday unveiled a plan to overhaul the airline’s service offerings while maintaining some of its standout policies.
“Southwest. Even Better” builds on seismic changes first announced in July, including switching to assigned seats and offering premium seat options with extra legroom. Now, it will include partnerships with international carriers and loyalty program enhancements in its evolution.
“We’re now 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,” Bob Jordan, president and CEO of Southwest, said in a prepared statement.
The airline's plan promises to revolutionize customer experience to boost profits.
Southwest is under pressure from Elliott Investment Management, an activist investor that has amassed an 11% stake in the airline, to cut costs and increase shareholder value.
The changes are the result of extensive consumer research.
“Southwest is a very data-driven company,” said Sean Cudahy, aviation reporter at The Points Guy, who attended the investor meeting. “Their goal here is really to try and broaden their customer base and entice more people to fly with Southwest.”
Southwest research found that 80% of its customers and 86% of passengers who fly other airlines want assigned seats. To get more travelers to fly Southwest, the airline will begin selling assigned seats in the second half of 2025.
The airline’s decision to offer seats with 5 inches of extra legroom is also based on research which found demand for premium experiences. Together, the changes are expected to drive more revenue.
Southwest is also partnering with Icelandair for international travel, starting with flights out of the Baltimore-Washington, D.C. area in 2025.
“Southwest, unlike its larger competitors in the U.S. that are part of big global alliances, does not have a network of international partner airlines,” Cudahy said. “What they're really trying to do is drive a lot more customers and value to its Rapid Rewards loyalty program. The vision is for customers to be able to redeem their Rapid Rewards points for international flights, whether you're flying directly to Iceland or beyond.”
Expanding how customers can use points is expected to improve Southwest’s loyalty program.
“Executives really feel like this is going to enhance the value of the loyalty program,” Cudahy said. “If you look around the airline industry, those loyalty programs are such big business and such critical parts of the business model for carriers.”
Some policies are sticking around despite all the changes, including free baggage.
“Based on Southwest’s research, the company believes that any change in the current policy that provides every customer two free checked bags would drive down demand and far outweigh any revenue gains created by imposing and collecting bag fees,” the company said.
