Southwest Bids Farewell To Open Seating After Customer Feedback, Poor Earnings

Southwest Airlines Co LUV has stubbornly held on to its first-come-first-serve seating policy for over 50 years.

The air carrier will now shed its famous open seating policy after a change in consumer preferences and poor second-quarter earnings.

The Dallas, Texas-based company cited how 80% of its customers and 86% of potential customers prefer assigned seats to open seating.

Southwest also found that when customers switch to competitors, open seating is the most commonly cited reason.

The change in seating policy will also allow Southwest to offer premium seating for the first time. Customers prefer having the option to pay more for additional legroom, feedback shows.

The company expects that one-third of seating will be designated premium.

“Moving to assigned seating and offering premium legroom options will be a transformational change that cuts across almost all aspects of the Company,” Southwest CEO Bob Jordan said.

Delta Air Lines Inc, a competitor of Southwest, has performed better than most industry peers in recent years. Experts have pointed to Delta’s premium identity as a means of insulation against unfavorable economic trends. Southwest’s introduction of premium seating could help the company regain customers seeking a premium experience.

Price Action: Southwest’s share price has fallen over 20% in the past year.

At the time of writing, the company’s stock is worth $27.45, up 3.16%.

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