Southwest Airlines Adds Assigned Seats and Premium Features

DALLAS, TX — Southwest Airlines executives announced a significant shift in their business model during an investor meeting in Dallas on Thursday, revealing their plans for "Southwest 2.0." 

This new approach will introduce assigned seating for the first time in the airline’s history, along with premium seating options that offer additional legroom, while still allowing passengers to check two bags for free.

Beginning in the first half of 2026, Southwest will phase out its traditional open-boarding system, which has been in place for over 50 years. CEO Robert Jordan and his team highlighted the need to adapt to evolving consumer preferences as they seek to attract younger, more affluent travelers and reverse a three-year decline in profits.

The changes come amid pressure from activist investor Elliott Investment Management, which has criticized Southwest’s management for underperformance compared to competitors. The hedge fund has called for the replacement of Jordan and most of the board, intensifying the urgency for Southwest to innovate.

As part of the overhaul, approximately one-third of the assigned seats will be designated as premium options, offering up to five extra inches of legroom. This adjustment will require removing a row of seats on some aircraft, with retrofitting scheduled to begin next year and conclude by the end of 2026.

Despite these significant changes, Southwest will maintain its selling point of allowing passengers to check two bags for free—a feature that sets it apart from other major U.S. airlines, which collectively generated over $7 billion in baggage fees last year. Executives believe that altering this policy could alienate customers and ultimately cost the airline more than it could gain.