Southwest is ditching its unassigned seat policy for the first time

The change to one of Southwest's best-known policies comes as it faces falling profits and pressure from an activist investor to turn things around.

• Southwest Airlines has had an unassigned seating policy for over 50 years.
• The carrier now plans to assign seats on all flights and offer premium seating options.
• The changes come as the airline faces pressure from activist investor Elliott Investment Management.

Southwest Airlines is eliminating its open seating model for the first time. Instead, it will start assigning seats before all flights and offering premium seating options.

The announcement on Thursday is part of the airline's mission to improve financial performance, increase its stock price, and enhance customer experience. It comes as an activist investor with a large stake pushes for big changes, including a new CEO

"Southwest represents the most compelling airline turnaround opportunity in the last two decades," the hedge fund Elliott Investment Management said in June when it began its crusade.

Since launching 57 years ago, the airline has had an open seating policy, meaning passengers choose their seats once they board their flight.

That will now change.

Southwest said research carried out showed that 80% of customers and 86% of potential customers favored an assigned seat system. The number one reason a passenger chooses a competitor is the open seating model, the company added.

Southwest did not give an exact date for the changes but said more details will be revealed in September.

More add-on revenue could be a lifesaver for Southwest

Southwest also announced that it will be introducing premium seating with extended legroom, with possibly up to one-third of a cabin being allocated to this kind of seat.

"Moving to assigned seating and offering premium legroom options will be a transformational change that cuts across almost all aspects of the Company," said Southwest's CEO, president and vice chairman of the board, Bob Jordan.

Paid seat upgrades are lucrative revenue sources for airlines and have largely allowed mainline carriers like American or Delta to avoid some of the financial stress that's hit low-cost carriers this year.

The airline will also add 24-hour operations from February of next year, with new overnight redeye flights available.

Changes to Southwest's seating policy were announced on the same day the company reported a significant drop in profits for the second quarter of the year. Southwest reported net income of $367 million for the quarter, down from $683 million in the same period in 2023.

While profits fell, revenues climbed, hitting a record $7.4 billion for the quarter.