Southwest Airlines is moving away from its signature “open seating” policy as part of efforts to boost its revenue and improve its struggling financial situation.
Since its foundation in 1973, Southwest has given passengers an opportunity to take any free seat upon boarding the plane. However, starting in 2025, the company will move to the industry standard of assigning seats.
Southwest is also introducing a number of other changes to “elevate the customer experience, improve financial performance, and drive shareholder value.” This includes the introduction of premium seats with extended legroom and overnight flights.
The change is expected to bring in $1 billion in revenue on an annual basis, according to CEO Bob Jordan.
“Moving to assigned seating and offering premium legroom options will be a transformational change that cuts across almost all aspects of the Company,” Jordan said in the press release. “Although our unique open seating model has been a part of Southwest Airlines since our inception, our thoughtful and extensive research makes it clear this is the right choice— at the right time—for our Customers, our People, and our Shareholders.”
Southwest Airlines has recently faced pressure from activist investor Elliott Management to overhaul its operations and make leadership changes amid underperforming stock. The airliner’s shares closed at $27.23 on Friday and are more than 4% down year-to-date and 21% down from this year’s highs from March.