Southwest Airlines once defined itself through open seating and two free checked bags. Those signatures helped build a loyal base. Now both policies face major overhauls. The changes hit at the heart of the carrier’s long-standing identity. Yet executives insist they secure a sustainable path forward.
Tony Roach, Southwest’s EVP and chief customer and brand officer, put it plainly at Fortune‘s COO Summit. He compared dropping open seating to “changing the engine in the car.” The airline isn’t chasing Delta’s model. “All we’re doing is widening our aperture to be able to add more premium into the mix,” Roach said. “It doesn’t mean we’re trying to be Delta, because we don’t think we need to be Delta to be successful.”
Executives Confront Shifting Demand and Margin Pressure
Roach spoke alongside Ayesha Molino, MGM Resorts International’s COO. Their panel highlighted parallel pressures. Spirit Airlines’ collapse served as a stark warning. Resistance to change carries real consequences. Both companies responded by reworking core offerings in response to consumer feedback and tighter economics.
For Southwest the moves extend beyond seating. The carrier introduced basic economy fares. It adjusted loyalty earning rates. Bag policies now differentiate by status and fare type. Early results look promising. Southwest’s stock has climbed more than 25 percent over the past year despite fuel cost headwinds. Roach described operations as “running better than it was before.”
Those gains align with internal forecasts. A March 2025 investor update projected revenue contribution from new initiatives would rise from $2.6 billion to $4.3 billion in 2026. Cranky Flier noted the initiatives — assigned seating, extra legroom, bag fees — arrived on time and overdelivered. Second-quarter unit revenue guidance called for 16.5 percent to 18.5 percent growth year over year. But the transition carries risks. Recent leadership shifts quietly altered the succession picture. Andrew Watterson moved to a pure operations role. Justin Jones took over as chief commercial officer. The moves aim for tighter commercial focus as the airline leaves its traditional low-cost roots.
And the content side stumbled. Content Marketing Institute reported that Southwest’s owned channels lagged during the January 2026 rollout. The Southwest Stories hub posted no fresh articles in the preceding month. Old campaigns disappeared from view. One Instagram post acknowledged excitement without naming specifics. “When Southwest got rid of its renegade identity in 2026, its day-to-day content marketing seemed a little lost,” the publication observed. The gap left room for customer speculation.
But the financial numbers tell a different story so far. Bob Jordan, Southwest’s CEO, outlined the strategy back in March 2025. “We have tremendous opportunity to meet current and future Customer needs, attract new Customer segments we don’t compete for today, and return to the levels of profitability that both we and our Shareholders expect,” he said in the Southwest investor release. The airline kept two free bags for top-tier members and certain fares. It expanded distribution through partners like Expedia. Loyalty points now reward higher-fare products more generously.
Meanwhile MGM faced its own test. Las Vegas saw 38.5 million visitors in 2025, a 7.5 percent drop from the prior year according to the Las Vegas Convention and Visitors Authority. Customers complained about value at core Strip properties. Hidden fees and rising costs eroded appeal. “We heard loud and clear last year from our customers that they felt like they weren’t getting that value proposition from Vegas anymore, particularly at our core properties,” Molino told the Fortune audience. “So we listened, we heard it, we changed.”
The response? MGM’s first all-inclusive packages. They bundle rooms, resort fees, parking, meals and entertainment into one price. The move directly tackles complaints about surprise charges. It redefines value for a segment that once embraced pay-as-you-go Vegas experiences. Molino stressed operational discipline at scale. MGM employs 60,000 people. “The trick is really to make sure that we keep our 60,000 employees focused on what they need to do every single day, which is deliver the best guest services possible,” she said.
The timing proved delicate. Media executive Barry Diller, whose firm holds a 26.1 percent stake, proposed an $18 billion takeover bid this week. Molino acknowledged the offer but kept attention on daily execution. Options remain open. Marketing strategies and booking flows sit under review.
So what ties these two stories together? Consumer expectations shifted faster than many anticipated. Leisure travelers grew more price sensitive after pandemic recovery. Business customers demanded premium options and predictability. Loyalty programs that once drove repeat visits now compete against a crowded field of credit card perks and hotel alternatives.
Southwest’s longstanding Rapid Rewards partnership with MGM, dating to 2013, offers one bridge. Members still earn points on qualifying Vegas stays. Yet the broader industry context has changed. Partnerships alone no longer suffice. Both companies now redesign the fundamental transaction.
Early data suggests the bets may pay off. Southwest reports stronger revenue per passenger. MGM’s all-inclusive test targets the exact pain point customers voiced. But execution will decide the outcome. Roach and Molino both emphasized staying true to core strengths while expanding choice. For Southwest that means friendly service and operational reliability even as fares grow more complex. For MGM it means consistent guest focus amid 60,000 employees and external bids.
Critics question whether these changes erode brand equity. Southwest built its reputation on simplicity. MGM built Las Vegas glamour on variety and surprise. Both now sell predictability and transparency in new forms. The risk of alienating core customers remains real. Yet the alternative — standing still — proved fatal for others.
Leadership adjustments at Southwest signal seriousness. Commercial strategy now receives dedicated oversight. Network planning, pricing and revenue management sit under one roof. The airline eyes further evolution. Speculation includes lounges, long-haul routes and even more segmented products. The old low-cost carrier model fades. A hybrid carrier takes shape.
MGM faces different pressures. Tourism numbers declined. Competition from other destinations grew. Online booking channels empowered consumers to compare total costs. The all-inclusive bundle attempts to recapture control of the narrative. It simplifies the decision. One price. Fewer surprises. Whether it drives incremental visits or merely shifts spending remains to be seen.
Both cases illustrate a broader truth. Iconic brands reach limits when markets evolve. Sustainability demands adaptation even when it feels uncomfortable. Roach’s engine metaphor resonates. The car still drives. The destination may look different. But without the update, the vehicle risks stalling.
Industry watchers will track second-half results closely. Southwest’s 2026 earnings targets sit at or above $4.00 adjusted EPS according to some forecasts. MGM must demonstrate that value redefinition lifts occupancy and spend. The Diller bid adds another variable. Integration questions or strategic reviews could distract if not managed carefully.
One thing appears clear. The era of standing on past success ended. Companies that listen to customers, measure the gaps and act decisively stand the best chance. Southwest and MGM placed their bets. The coming quarters will reveal whether those wagers deliver the future both leaders described.
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