Southwest Airlines Ends 50-Year Tradition with a Radical Change

Southwest Airlines, a 50-year-old airline, is ending its open seating policy and introducing premium seating with more legroom due to customer preference. The airline is also starting red-eye flights for the first time, amid a 51% drop in profit and intense competition with a glut of airline seats chasing increased demand.

The U.S. economy expanded at a 2.8% annual rate in the second quarter, up from 1.4% in the prior quarter. However, earnings season remains a concern, with a huge earnings miss at Ford and a 46% slump in profits at American Airlines.

An economic surprise on Thursday could offset earnings angst one-day after the biggest stock market sell-off in 1-1/2 years. Southwest Airlines' transition to assigned seating and premium options comes as its flight attendants have grown tired of intervening in seat disputes.

While the airline is making these significant changes, its limited food and beverage service compared to competitors will remain unchanged. American Airlines also cut its annual profit forecast due to a failed sales strategy that drove away corporate travelers and impacted revenue.

The airline is now implementing a new strategy and making changes to regain profitability.