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.
21 comments on “On the Eve of the First Aircraft Retrofit, Southwest Keeps Changing Its Plans”
If this is what you’re seeing from Southwest as an outsider, I can only imagine how confusing & chaotic things are at Southwest for the middle management and below (down to the rank and file hourly employees who will actually have to reconfigure the planes, if that isn’t outsourced).
At this point everyone at Southwest probably just wants A decision (ANY decision) from upper management that management will stick to for at least 9-12 months, regardless if it’s the “best” decision. Not to mention that those types of situations usually involve a lot of extra (and wasted) work and stress from the lower levels as plans constantly change and as internal politics see certain concepts move and in out of favor.
I’ve been in those situations at other companies where management can’t make up its dang mind and it’s incredibly frustrating and demoralizing to the lower levels of the organization when leadership isn’t leading on issues like that.
People want to be led by leaders who can communicate where they going, why they are going there, and how they are going to get there efficiently, not by leaders who take them in a path reminiscent of that in a Family Circus cartoon.
It’s difficult to get your team members ready to support the new changes when they don’t even know what changes are going to happen until the very last minute. Clearly Elliot and friends lopped off the budget line for “change management.” There was no line for “decisiveness” but that appears to be AWOL as well. The fact this is all playing out in public means it’s likely 10x worse internally. Total clown show.
For the first time ever, I booked away from WN to fly to Chicago, even though MDW is far more convenient for me. When AA seems like a well run operation by comparison, you know you’re in trouble.
On the boarding process, my best guess is WN sees more potential to monetize priority boarding as demand for overhead bins ticks up with the end of free bags—and perhaps it’s easier to sell customers an opaque “priority” group as opposed to the current numbering system where it’s obvious you might be the 30th or 40th person to board the plane?
Struggles played out in public like this don’t bode well for the future.
Yes exactly. We are watching in real time what happens when private equity sticks their grubby little hands into the operations of an airline. We also know what the end result will be as we’ve seen the results from such businesses as Toys R Us, Alexander’s & now Sears.
Cranky, are you doing a podcast on this?
Sears and Toys R Us were damaged businesses before private equity showed up. Walmart, Costco and Amazon changed the retail landscape and these businesses never adapted.
That maybe true about both Toys R Us & Sears, but it doesn’t refute the fact that it was private equity that drove in the final nails into their respective coffins.
In spite of their massive sizes Wal-Mart, Target, CVS & Walgreens for different reasons are down that same path & Southwest better be careful as they too maybe headed down that same runway if they don’t “lift their nose & straighten their wings” soon.
SEAN – No, I think the guys are tired of hammering on Southwest for now, so we’ll focus on other topics.
You’d think that Southwest could work through seat maps like you have done here, and it shouldn’t be that hard to come up with something that makes sense.
However, they don’t even need to do that. Plenty of other carriers have all done this before; this isn’t a novel problem to solve. Just look at a few historical seat maps from Delta, American, United, JetBlue, even EasyJet and Ryanair, and see what works for them. They may as well just straight up copy the seat map from other carriers like all the rest of their new business model.
I agree, but none of those carriers have a parasite currently attached that is slowly sucking the life out of them.
They don’t think all this chaos is costing them anything with customers, but they’re wrong. I’m buying my ticket for my November Dallas trip in the next three weeks (with two free checked bags) and then I’m likely to never fly them again. I’m disgusted at the money grab and the crappy way they’re treating their employees. If they want to turn into People’s Express, OK, you can disappear just like they did. I know I only fly two people three or four times a year so in theory, I’m not their primary customer, but I’m sure American or United will be very happy to have us.
All of the serious Southwest loyalists that I know are angry and disgusted, and they are all also weighing where to take their business. Greed is not a good move, especially these days.
I have 3 angles to look at here.
First – FAA didn’t approve of the original design, especially around emergency exits.
Second – Less expensive to move lights & vents to match new rows during update with new layout, plus standardize the 700s/-7s with the 800s/-8s after modification.
Third – They know they have an audience that just buys prices or in family groups and they need the additional steerage seats in the back.
SYVJEFF – It can’t be the first one, because this is what exists on the airplane today. Nothing changes around the exits in the original design. It’s the new design that requires changes around the exits.
And the third one, that might have been the case in the second iteration, but now they’re back to the same number of Standard seats based on what they said on the earnings call.
What I don’t understand is how airlines can just keep cramming more and more seats into the same planes. Aren’t all planes only legally certified up to a certain limit, based not just on space, but the ability to evacuate on a certain amount of time? Or has that changed? Or is the FAA back to its old Good Ole Boy ways of just rubber stamping whatever the airlines ask for? How can they get away with putting (for example) around 200 seats in an A320, a plane that was originally designed for only around 175 in an all economy layout?
Matt – At no time in this entire process has the seat count changed on Southwest’s 737-800/-8 aircraft. But if you’re just talking about this in general for other airplanes, the aircraft is certified up to a certain level and then if it’s exceeded, they have to prove that they can still exit the airplane in the allotted time. It should probably be revisited, but good luck getting the FAA to do that now.
The FAA only requires that airlines can evacuate everyone in 90 seconds (or something like that), along with some safety assessments on the seat itself.
Over the years, seat manufacturers have gotten clever. They’ve introduced slimline seats that aren’t as well padded and has space more effectively, so airlines can cram more seats in while still providing similar (or slightly worse but still enough to meet evacuation requirements) room. Aircraft manufacturers have also gotten clever: Airbus has A321 configurations which move the exit door configuration to let LCCs squeeze in more seats, lavatories have gotten smaller, etc.
This has all the makings of a complete and utter disaster (can’t say what I want to). Who’s on first, what’s on second. This should be real fun (rolling eyes). Friends at WN at not happy campers either.
In other news: AA’s Gate Lice Detector appears to be working.
Captain,
The shortest and concise message by you is the best in my mind…..
I rarely fly SW, the exceptions being when it’s the only N/S option on a tough travel day/week. (BNA-LAS, e.g.) I think Elliott’s actions create the possibility of finally making it an adult airline, which its festival-seating tradition never allowed for. The first new seating chart would clearly have been a disaster, as pax used to scrambling wandered about the cabin looking for their (newly assigned) seats. The second option is far less messy. This is an airline in transition, and the battle between the Traditionalists and the Moderns is playing out in public, which as noted, is not a good look. Hoping to see white smoke in the chimney soon.
What I had previously liked about WN is that they managed to find ways to generate additional revenue by adding additional value. This just feels like a money grab by a once great airline. All by the same activists that killed Cabela’s. When the dust settles on all of this and Eliott has made their money, I hope someone does a complete analysis on this. It would be a great topic for analysis on the dynamic of stakeholder activism vs customer first. My question is this going to end up more like an 80’s Continental with Frank Lorenzo or a 90’s TWA with Carl Icahn or something in between?
The newest iteration sure looks a lot like JetBlue’s 320 configuration (except the extra 4 seats in the exit row at row 15)…..