Thursday morning, Southwest Airlines introduced a new three-year plan, “Southwest. Even Better.” This plan includes multiple changes to the airline’s operations and partnerships.
The announcement of this plan came as part of the company’s “Investor Day” being held at its headquarters in Dallas.
A few of the changes include the airline adding things other airlines have already been doing for years, such as assigned seating and premium seating.
“But it is not clear whether Southwest, which has become one of the world’s biggest airlines by being different, can now do well by acting a little more like other airlines,” per The New York Times.
What changes are Southwest Airlines making?
In a news release published Thursday morning, Southwest Airlines listed the changes it plans to make over the next couple of years:
- Southwest will be diverting from its open seating model and is adding assigned seating to flights.
- The airline will start selling assigned seats in the second half of 2025 and the first flights with assigned seating will begin operating in the first half of 2026.
- In addition to assigned seating, the airline will be adding premium seating. Southwest will offer options for extra legroom in approximately a third of its seats.
- Southwest will also be changing its boarding process to improve efficiency. The new boarding process will include boarding through position numbers as Southwest has traditionally done.
- Those who purchase premium seating will be among the first to board.
- Southwest Airlines intends to partner with international carriers to expand its flights outside of the U.S. The first of these partners is Icelandair; the partnership is expected to launch in 2025 through the Baltimore-Washington International Airport.
- Southwest plans to add at least one more partner carrier next year.
- The airline also plans to begin offering overnight red-eye flights for the first time in February 2025.
- Southwest will be launching a new product in 2025: Getaways by Southwest. Through Getaways, the airline will offer unique vacation packages. The vacation packages are customizable and will feature Southwest’s cancellation policy and flexibility extending to hotels and other elements of the packages.
One thing Southwest emphasized it wouldn’t be changing is its free bag policy. The airline will continue to offer each passenger two free checked bags.
Why is Southwest Airlines making these changes?
Southwest’s plan to revitalize comes under pressure from Elliott Management, an activist hedge fund that holds a stake of more than 10%, per The New York Times. Elliott claimed Southwest is underperforming and that the airline can better contain rising costs and improve profit margins.
The hedge fund has been pressuring the airline to make leadership and operational changes.
Along with the three-year plan, Southwest also announced Thursday that it is adding a new member to its board of directors, effective immediately.
Robert Fornaro, the new board member, has four decades in the airline industry and previously served on the board of directors of Spirit Airlines, including serving as president and CEO, according to Southwest Airlines.
According to CNBC, the plan is meant to add $4 billion to the company’s earnings in 2027.
After the airline made the announcement Thursday morning, Southwest’s shares jumped more than 9%, according to The New York Times.