Southwest breaks 50-year tradition and plans to start assigning seats

Southwest Airlines plans to abandon its more than 50-year tradition and begin assigning seats and selling premium seats to customers who want more legroom.

The airline said Thursday it is studying seating options and making the changes as passenger preferences have changed. The measures could also generate revenue and boost financial performance.

Southwest made the announcement on the same day that both it and American Airlines reported a sharp drop in second-quarter profit despite rising revenue.

Airlines are struggling with higher costs and reduced pricing power, especially on flights within the United States, as the industry adds flights faster than travel demand is growing.

Dallas-based Southwest said its second-quarter profit fell 46% from a year earlier to $367 million as higher costs for labor, fuel and other expenses outweighed a rise in revenue. The results met Wall Street’s expectations.

American Airlines also reported a 46% drop in profit to $717 million and said it would break even in the third quarter — well below Wall Street expectations for the July-September period.

American “did not meet our initial expectations” due to an abandoned sales strategy and an oversupply of domestic flights, CEO Robert Isom said. He said the airline was responding with a strategy that increases profits and “makes it easier for customers to do business with American.”

Southwest has used an open seating model since its founding, with passengers lining up to board and choosing their own seat once they board the plane. But, the airline said, preferences have “evolved” – as more travelers take longer flights, they want an assigned seat.

The airline also said it will offer redeye flights for the first time.

Southwest said its first overnight and overnight flights will land on Feb. 14, 2025, in nonstop markets that include Las Vegas to Baltimore and Orlando; Los Angeles to Baltimore and Nashville; and Phoenix to Baltimore. It plans to implement additional redeye flights over time.

The seating policy change comes as Southwest is under pressure from Elliott Investment Management. The hedge fund argues that the airline lags behind rivals in financial performance and has failed to change with the times. He wants to replace CEO Robert Jordan and President Gary Kelly.

Shares of all major airlines fell before the opening bell on Thursday. fell 6% and American Airlines Group Inc. fell 7%. Delta, JetBlue and United fell more than 1%.