Southwest weighs seating adjustments to drive up income

Southwest Airlines is contemplating adjustments to its single-class, open-seating cabins to drive up income, CEO Bob Jordan instructed CNBC on Thursday, a shift that may be among the many largest within the airline’s historical past.

“We’re wanting into new initiatives, issues like the way in which we seat and board our plane,” Jordan mentioned in an interview after the provider’s disappointing first-quarter report.

Southwest’s all-Boeing 737 fleet has a single financial system class cabin and no seating assignments, although it does supply earlier boarding for a charge so prospects can snag their most popular seats. The airline has centered on maintaining its product easy and user-friendly for years, aiming to maintain its personal prices and complexity to a minimal.

In the meantime, rivals together with Delta and United have touted excessive income progress for premium seating equivalent to enterprise class and strong upsell rates.

Analysts have repeatedly requested Southwest about alternatives for premium seating or further charges. (The airline would not cost vacationers for his or her first two checked baggage.)

Most U.S. airways cost vacationers to decide on a lot of its seats upfront, even those who do not include further legroom. Eight U.S. carriers — Alaska, Allegiant, American, Delta, Frontier, JetBlue, Spirit and United — collectively introduced in $4.2 billion from seating charges of their home networks in 2022, in line with Jay Sorensen, an airline ancillary income knowledgeable at IdeaWorksCompany.

Jordan mentioned no choices have been made on what sort of adjustments Southwest will in the end make, however he mentioned research have yielded “attention-grabbing” outcomes.

“Buyer preferences do change over time,” Jordan mentioned.

Whereas particulars had been scarce throughout Southwest’s earnings name, when requested whether or not Southwest would take into account a separated cabin on its planes, Ryan Inexperienced, the provider’s chief industrial officer mentioned: “Curtains and issues like which might be a bit far afield from what Southwest Airways is.”

Inexperienced added that the provider just isn’t contemplating charging for checked baggage as a result of “individuals select Southwest Airways as a result of we do not have bag charges.”

— CNBC’s Phil LeBeau contributed to this report.