Southwest reports 60% of passengers buying extras after seating and bag changes

Southwest Airlines chief financial officer Tom Doxey said 60% of the carrier's passengers now pay for ancillary products such as exit-row seats or checked bags, against fewer than 20% in the past.

Speaking at a Morgan Stanley investment conference on 16 September, Doxey said business revenue is up 30% year on year. Assigned seating and extra-legroom seats, introduced in January, are expected to produce more than $1 billion in earnings before interest and tax in 2026 and $1.5 billion in 2027.

Those changes are helping Southwest offset part of this year's higher fuel costs, which Doxey described as a financial problem across the industry. The carrier expects to recover a good share of the increases through pricing, and to keep doing so if fuel prices stay high.

Southwest has lowered its 2026 capacity growth guidance to roughly 1% to 1.5%, from an initial 2% to 3%, in response to fuel costs. Doxey said that trend would continue if fuel prices remain elevated for longer.

United Airlines and American Airlines, also at the event, said they are reducing December schedules to hold capacity in check and control costs.

Doxey said the corporate changes have let Southwest address what he called wallet-splitting, where travellers might previously have chosen Southwest for short or regional flights but another carrier for other trips. He said the product is now resonating with customers in a way it did not before, while retaining the existing customer base.