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canyonwalker"So, I see Southwest is changing to assigned seats," many relatives and friends of my inlaws' family prompted me during our Thanksgiving visit.
It may seem an odd conversation starter to you, but it makes sense to me as many of these folks know me as the one in the family who's always flying somewhere. And when they inquired how we got to Harrisburg, PA from San Francisco and I mentioned flying Southwest to BWI— where there's a nonstop to/from OAK several days a week!— they free-associated the one thing they've heard recently about Southwest.
Yes, it's true. Southwest is moving to assigned seating. It's a change from Southwest's "Open Seating" policy that no seats are assigned and passengers are free to choose any seat once they board. Open Seating has been their policy, and even part of their brand identity, for their entire 57 year history, making Southwest unique in the industry.
"Why'd they finally change that?" folks asked next. Or sometimes they'd put a sharper point on it: "What took them so long to standardize with the rest of the industry?"
With that I'd point out that the change to assigned seats is not about assigned seats, per se. It's about increasing revenues. I.e., getting passengers to pay more. And the way all the other airlines have gotten passengers to pay more over the past 20 years has been to introduce ancillary fees.
Passengers say they hate being nickeled-and-dimed with fees, so airlines were cautious about introducing them 20 years ago. The industry quickly found that all passengers really cared about was the cheapest upfront ticket price, add-on fees later be damned. Plus, when all airlines were charging fees, there wasn't an alternative. ...Except that, all this time, Southwest has avoided most of those fees. It became one of their big selling points.
So, Southwest was virtually alone in charging way fewer fees to customers. Customers, smart customers, might look at that as, "Hey, that's a benefit!" A lot of investors take the opposite viewpoint. To them it's, "You proud fools are failing to siphon as much money as possible out of customers' pockets!"
That's where the pressure to change has come from: from investors. An activist investor has gotten involved, campaigning against the status quo among Southwest Airlines' board of directors. He's been lobbying them to pressure the airline execs to change the policies. But not because assigned seats are "better" or because they're "standard", but to make more money. To make more money by being able to charge passengers more fees.
And it's a major change. Not only will Southwest have to change its data systems to manage seat assignment— a whole new dimension of operations that they never had to in their entire history—but they'll have to refit all their aircraft with the better seats they'll charge more for. No, "better seats" will not be first class. They'll just be ordinary seats with a few inches more legroom, like United Airlines' Economy Plus and American Airlines' Main Cabin Extra. But still, that's a lot of work. Refitting their entire fleet will take time, which means— among many other substantial challenges and risks— there will be a period of probably months when passengers are invited to pay extra money for choice seats but then find they're boarded onto an aircraft that doesn't have premium seats. Oops! 🤬
It may seem an odd conversation starter to you, but it makes sense to me as many of these folks know me as the one in the family who's always flying somewhere. And when they inquired how we got to Harrisburg, PA from San Francisco and I mentioned flying Southwest to BWI— where there's a nonstop to/from OAK several days a week!— they free-associated the one thing they've heard recently about Southwest.
Yes, it's true. Southwest is moving to assigned seating. It's a change from Southwest's "Open Seating" policy that no seats are assigned and passengers are free to choose any seat once they board. Open Seating has been their policy, and even part of their brand identity, for their entire 57 year history, making Southwest unique in the industry.
"Why'd they finally change that?" folks asked next. Or sometimes they'd put a sharper point on it: "What took them so long to standardize with the rest of the industry?"
With that I'd point out that the change to assigned seats is not about assigned seats, per se. It's about increasing revenues. I.e., getting passengers to pay more. And the way all the other airlines have gotten passengers to pay more over the past 20 years has been to introduce ancillary fees.
Ancillary Fees
What are "ancillary fees"? They're all those nuisance fees that airline passengers say they hate. Fees for checked bags, fees for getting a marginally better seat, fees for even choosing a seat at booking, fees for boarding with an earlier boarding group, even fees for asking an agent at check-in to print your boarding pass instead of doing it yourself.Passengers say they hate being nickeled-and-dimed with fees, so airlines were cautious about introducing them 20 years ago. The industry quickly found that all passengers really cared about was the cheapest upfront ticket price, add-on fees later be damned. Plus, when all airlines were charging fees, there wasn't an alternative. ...Except that, all this time, Southwest has avoided most of those fees. It became one of their big selling points.
So, Southwest was virtually alone in charging way fewer fees to customers. Customers, smart customers, might look at that as, "Hey, that's a benefit!" A lot of investors take the opposite viewpoint. To them it's, "You proud fools are failing to siphon as much money as possible out of customers' pockets!"
That's where the pressure to change has come from: from investors. An activist investor has gotten involved, campaigning against the status quo among Southwest Airlines' board of directors. He's been lobbying them to pressure the airline execs to change the policies. But not because assigned seats are "better" or because they're "standard", but to make more money. To make more money by being able to charge passengers more fees.
A Complex Change
Charging people for better seats is one of the most obvious forms of ancillary revenue. To charge for better seats, though, Southwest has to switch to assigning them. Otherwise why pay? The people who board first would just take the better seats for free. So this whole change in long-standing policy and operations, is to support the charging of a new fee.And it's a major change. Not only will Southwest have to change its data systems to manage seat assignment— a whole new dimension of operations that they never had to in their entire history—but they'll have to refit all their aircraft with the better seats they'll charge more for. No, "better seats" will not be first class. They'll just be ordinary seats with a few inches more legroom, like United Airlines' Economy Plus and American Airlines' Main Cabin Extra. But still, that's a lot of work. Refitting their entire fleet will take time, which means— among many other substantial challenges and risks— there will be a period of probably months when passengers are invited to pay extra money for choice seats but then find they're boarded onto an aircraft that doesn't have premium seats. Oops! 🤬
