Southwest Airlines is ending flights to four airports - and that's not even the big news for travelers

By Andrew Keshner and Claudia Assis

The airline's stock slumped after its first-quarter earnings report Thursday

Sit down for this one, Southwest Airlines travelers: The airline carrier with a distinct seating policy has suggested it's rethinking its approach.

While assigned seating and money-making premium seats are common for airlines, Southwest (LUV) has long had only boarding groups, and then open seating once onboard. The company does allow flyers to purchase upgraded boarding, which puts them in the top boarding group.

But on a Thursday post-earnings call with analysts, Chief Executive Bob Jordan hinted at changes ahead. Jordan said that the airline, which posted a wider-than-expected quarterly loss, is studying possible changes to its open-seating policies as part of its efforts to return to profitability.

Jordan dodged questions about how, exactly, Southwest would go about changing things. "We are just not ready to tell you exactly what we are studying," he said on the call. "We will be as we move across the summer and head to our investor day in September."

Read more: Southwest Airlines considers ending open seating as loss widens, revenue falls short

If there are changes ahead for seating, they could mean another opportunity for passengers to spend money, says Ahmed Abdelghany, associate dean for research and professor of operations management at Embry-Riddle Aeronautical University.

Airlines offer flights from one destination to another, but that's only part of their proposition, Abdelghany said. Seat configuration is "for them, a different product," hinging on factors like leg room, reclining ability and comfort.

A plane's cabin is a spot where airlines find ways to rake in more customer cash, he noted. "At the end, it's a space. How much money I can make out of this space? ... Most airlines right now can make money out of passengers when they select their own seats."

Coming a month before Memorial Day weekend, the informal start of summer, the Southwest Airlines news is another reminder of the costs of travel.

Earlier this week, the Biden administration finalized rules that will make carriers pay passengers cash refunds when flights are canceled or seriously delayed. Mishaps with bags and paid wifi service are also grounds for a refund, the rules said.

No more Southwest flights to these four airports

What's definitely happening is an end to Southwest flights at four airports: Bellingham International Airport in Washington state, Cozumel International Airport in Mexico, George Bush Intercontinental Airport in Houston and Syracuse Hancock International Airport in upstate New York. The flights end Aug. 4.

Ending flights to any destination is "never an easy decision," Southwest CEO Jordan said Thursday. "These are wonderful communities and we are very grateful for their support," he said.

But Southwest's loss is a gain for other carriers, according to a note from Raymond James analyst Savanthi Syth.

At Bellingham - located in Washington's northwest corner near the U.S.-Canada border - Allegiant Air (ALGT) will benefit most from Southwest's absence. In sunny Cozumel, it's American Airlines (AAL) and United Airlines (UAL) that stand to gain the most; in Houston, United, Frontier Airlines (ULCC) and Spirit Airlines (SAVE) are the winners. And in Syracuse, Frontier and JetBlue Airways (JBLU) will benefit most from Southwest's departure.

Southwest is also planning to "significantly" restructure in other markets, mostly by implementing capacity cuts at Hartsfield-Jackson Atlanta International Airport and Chicago O'Hare International Airport.

Southwest executives on the call said the company would cut capacity at O'Hare by roughly half, depending on the season, and cut capacity at Hartsfield-Jackson by about 30%.

"We are committed to continued network adjustments to specifically address underperforming markets. We're committed to adjusting our capacity and managing down [capital expenditures]," Jordan said.

It's not necessarily the case that fare prices will go up at these destinations once Southwest flies out of the picture, said Abdelghany. There are other factors at play, like connectivity to nearby hubs and price competition among the airlines that are sticking around.

Southwest's pullback may also narrow or eliminate nonstop options in certain instances, Abdelghany added.

A United spokesperson declined to comment on future prices and flights to Cozumel, but noted that the airline increased capacity to the location this year. The carrier gets passengers to the tourist hotspot from Houston, Denver and Chicago O'Hare.

American Airlines offers two daily flights from Cozumel to Dallas, one to Miami and a Saturday-only flight to Charlotte, a company spokesperson said.

"American's fares out of Cozumel are competitive for the market," the American Airlines spokesperson said, while declining to comment on future prices or specific routes and markets.

-Andrew Keshner -Claudia Assis

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04-25-24 1737ET

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