Southwest Airlines to Introduce Reserved Seating Amid Profit Decline

Southwest Airlines has announced a significant shift in its seating policy, moving away from its traditional unassigned seating system that has been in place for 50 years. The airline will now allow customers to reserve seats, a change driven by research indicating that 80% of travelers prefer assigned seating. Alongside this, Southwest plans to introduce charges for "premium" seats with additional legroom, offer red-eye flights, and revamp its boarding process. These changes come as the airline reported a 46% drop in profits for the April-June period, totaling $367 million. The decision to implement reserved seating is part of a broader strategy to enhance customer experience and generate additional revenue. Premium seats are expected to occupy about one-third of the aircraft's space, and customers will also have the option to pay for earlier boarding. Southwest has indicated that more details regarding these changes will be released in September. The airline's recent struggles have drawn the attention of Elliott Investment Management, which has acquired an 11% stake in the company. The investment firm has criticized Southwest's outdated operational strategies and has called for significant changes, including the removal of CEO Robert Jordan. Elliott argues that the airline's adherence to its long-standing practices has hindered its competitiveness in the evolving airline industry. In light of these challenges, Southwest is also addressing operational issues, including delayed aircraft deliveries from Boeing and an overestimation of domestic travel demand. The airline plans to reduce capacity in the coming months, with the new seating arrangements expected to generate over $1 billion in revenue.