On the Eve of the First Aircraft Retrofit, Southwest Keeps Changing Its Plans

I continue to be confused by Southwest Airlines. This is a company that had a credible start to a plan to modernize the business, then was forced to sell its soul to make more money more quickly, and now… I am at a loss. The airline is preparing for its first modified airplane with extra legroom seating options, but it can’t seem to get its story straight. The configuration appears to be changing on a regular basis. There is clearly an internal struggle going on here, and it’s playing out in public.

If you recall, when Southwest announced it would roll out an extra legroom section throughout the fleet, it had a dog-and-pony show at investor day back in September which I attended. We got on an airplane that was mocked up with the new seats, and here is what that looked like:

The plan was to have 68 “Extra Legroom” seats, 53 “Preferred” seats (Standard seats that are closer to the front and cost extra), and then 54 “Standard” seats in the back of the bus. This kept the total on the B737-800 and MAX 8 the same as it is today at 175 seats.

The beauty of this change was that it not only kept the seat count the same, but it provided options for customers to spend more and get more, if they wanted. I figure that the Extra Legroom seats up front would command the most money followed by the ones behind the wing and then finally the Preferred seats behind that since they have no tangible difference except for position on the airplane. In all, two-thirds of the seats would have been able to generate some revenue that can’t be generated today.

But now, this plan has been changed. Southwest released a page about assigned seating on its website, and that included an updated seat map which looks like this:

What’s different? The number of seats on the airplane remains at 175, but things have just moved around. Most importantly, there are a lot fewer Extra Legroom seats. All those behind the exit are gone and have become Standard seats. It would have dropped even further had the airline not made everything around the wing exit an Extra Legroom seat, that added eight to the total.

This configuration has 46 instead of 68 Extra Legroom seats, reducing earning capability. There would also be 84 Standard seats. This means that instead of having 121 seats that Southwest can get people to pay extra for, it would now have only 91. And remember, Southwest gained ZERO new seats by making this change, so it’s a headscratcher.

This would have been remarkably stupid if it was actually put on an airplane like this. The seating behind the exit would have remained unchanged from where it is today. That means Standard seats would continue to have 32″ of pitch which means if you want to pay more to get a Preferred seat, you would actually pay for LESS legroom at 31″ of pitch.

But fear not, because this plan has already changed again, even though the website hasn’t been updated to suggest that’s the case. On Southwest’s Q1 earnings call, Tom Fitzgerald with TD Cowen asked about the reduction in Extra Legroom seats. COO Andrew Watterson said this:

… behind the exit row, Extra Legroom was obviously going to be not as attractive as in front of the exit row, so we decided to concentrate more extra legroom in front of the exit row to make them more attractive and reinforce the pricepoint for them. And the ones that were formerly Extra Legroom behind the exit row, we’ll turn those into a form of Preferred seats. They will have a little bit extra legroom…

Wait, what? So now there will be two different types of Preferred seats, apparently. The ones in front of the exit will have 31″ of pitch, but the ones behind will have a “little bit” more. We can try and do some math here to figure out what that means.

Those three rows around the wing exits are now going to be Extra Legroom. That would suggest that the second and third rows are actually going to move back a few inches, because they were not going to have more than 31″ of pitch before. (Side note: That’s why there is no window seat in that middle row. It means Southwest didn’t need extra legroom to have clear access to the exit. But if those will now have extra legroom, then why would you keep the missing window seat configuration? Maybe we’ll see yet another change….)

Anyway, then you have the five rows behind the exit that were going to be Extra Legroom at 34″ pitch but will now be Preferred at, I dunno, maybe 32″ pitch? (What counts as “a little bit” of extra legroom?) If it’s 32″, that means you save 10 inches over the last configuration. So then maybe the two back exit rows go up to 36″ of pitch? That would put the Standard seats at 31″ and the math works.

Of course, this now means that you technically have four different types of seating even though you only have three names for them. If you want Preferred, you’ll have to decide between sitting up front or getting a little bit of extra legroom. This is not a clear message.

On the call, Southwest said this “gives us better revenue monetization opportunites in the end,” but I don’t see how that’s even possible. All this does is gain 8 Extra Legroom seats at the exit instead of having 30 more immediately behind the exit. Considering you’re going to have a lot of A-Listers getting Extra Legroom for free with status, this does not seem like a revenue-positive tradeoff. People will pay more for true Extra Legroom than for a Preferred seat.

For his part, CEO Bob Jordan backpedaled on the original investor day plan saying, “What we showed you was a very strong hypothesis [of what the aircraft would look like].” I don’t believe that for one minute. What they showed us was the real plan, but someone changed it.

My money is on the new board members causing trouble over there. Somebody decided this new configuration was better, but I don’t see how that could be based on actual analysis. This feels like an internal struggle that’s playing out in front of our eyes. I know the first airplane is coming out in a matter of days. Let’s see if it changes again before that happens.

Bonus Stupidity: The Boarding Process

Since I’m already fired up, I might as well pile on with a look at the shift in the boarding process. Back at investor day, Southwest talked about how it would keep its boarding process with the different boarding poles because it was a better experience. I don’t disagree. But now, it has decided to throw that out entirely and go to a very standard boarding process. But why?

The current boarding process is usefully different. It provides a less-stressful environment than the other airlines, and it should speed up the process itself by getting everyone in a neat and orderly line. It also just sets a tone that this is not the same old airline as all the rest — even if it is increasingly becoming that same old airline in reality.

That being said, perhaps the biggest argument in favor of keeping the boarding process is… it already exists. There is certainly the argument to be made that the poles take up real estate that could be filled with seating instead. That would be very customer-friendly, but it doesn’t generate additional revenue. I also don’t imagine that changing the boarding process would shift anyone’s purchase behavior, so Southwest can’t really care about this in its current state.

The reality is that keeping the poles is the easiest and most cost-effective way to deal with boarding, besides having a potential positive benefit. It is no doubt going to be costly to remove all of these setups from every airport and then install new seating. There is no sane argument for that to happen.

These two decisions make me really question who is running the show over there. If these changes were going to result in a financial benefit, at least they would be consistent with everything else we’ve seen happen lately. But this is the opposite, and it is very concerning.