In a significant move that could reshape its future, Southwest Airlines has filed a request with the U.S. Department of Transportation (DOT) seeking blanket approval to operate flights to any country with which the United States has an Open Skies agreement. This includes over 120 nations across Europe, Latin America, Asia, and Africa . While the airline emphasizes that this filing doesn’t guarantee immediate expansion, it marks a pivotal step toward broadening its international reach beyond its current limited destinations in Mexico, Central America, and the Caribbean.
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Cost-cutting measures and organizational restructuring
Southwest’s international ambitions come at a time of internal transformation. Facing declining profits and mounting pressure from activist investors like Elliott Investment Management, the airline has initiated several cost-cutting measures. In February, it reduced its corporate workforce by 15%. This reduction includes the elimination of 11 senior leadership roles, representing 15% of the company’s senior management committee. The layoffs are expected to save $210 million in 2025 and an additional $300 million by 2026 .
These measures are part of a broader strategy to streamline operations and improve financial performance. CEO Bob Jordan stated, “We are at a pivotal moment as we transform Southwest Airlines into a leaner, faster, and more agile organization”.
The layoffs primarily targeted corporate overhead and leadership positions, aiming to reduce costs and enhance decision-making efficiency. The company anticipates incurring $60 million to $80 million in severance and post-employment benefits in the first quarter of 2025 .
Additionally, Southwest is eliminating its in-house skycap service—curbside baggage assistance at several airports, including Dallas Love Field, Austin-Bergstrom, and San Diego International, transitioning these services to a third-party contractor
These strategic shifts reflect Southwest Airlines’ efforts to navigate financial challenges and adapt to evolving market dynamics. By implementing cost-cutting measures and introducing new revenue streams, the airline aims to strengthen its financial position and ensure long-term sustainability.
Introducing new revenue streams
In addition to workforce reductions, Southwest is implementing new revenue-generating strategies. Starting May 28, 2025, the airline will end its long-standing policy of offering two free checked bags for most passengers. Instead, it will introduce checked baggage fees, aligning with industry standards. While specific fees have not been disclosed, similar airlines charge between $35 to $50 for the first and second bags. Exceptions will apply to Rapid Rewards A-List preferred members and top-tier fare passengers, who will still receive two free checked bags.
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Additionally, Southwest airlines plans to transition from its open seating policy to assigned seating by 2026. The new seating options will include Premium, Preferred, and Standard Seats, providing passengers with more choices and potentially generating additional revenue. A new “Basic Fare” tier will also be introduced for budget-conscious travelers.
These changes mark a significant shift from Southwest’s traditional no-frills approach, aiming to enhance revenue streams and align more closely with industry practices.
International partnerships and upgrading the fleet
As a means of facilitating its ease of expansion globally, Southwest airlines has forged strategic partnerships with airlines including Icelandair, allowing travelers to access destinations in Europe via Baltimore, Nashville, and Denver hubs. Additional partnerships with Air France and KLM are also intended to enhance connectivity to Europe, with travelers offering more options and simpler booking processes
Recognizing the need for operational revisions, Southwest plans to upgrade its entire fleet of over 800 planes by the end of 2025. The transformation includes the installation of premium seating with increased legroom and the move to assigned seating, following international flying standards and enhancing the comfort of passengers.
In summary
Southwest Airlines’ filing of expansion plans for additional international routes is a turn from its origins in catering to the domestic market. It aims to prepare itself competitively in the global aerospace sector through alliances, updating its fleet, and readjusting the business model. While challenges are still present, these developments reflect Southwest’s willingness to evolve with the industry’s demands and consumers’ preferences
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