Southwest’s C.E.O. on Why Now Is the Time for Bag Fees and Assigned Seats

Business|Southwest’s C.E.O. on Why Now Is the Time for Bag Fees and Assigned Seats

At the headquarters of Southwest Airlines near the Dallas Love Field Airport, a large green sign with a big yellow arrow points to Bob Jordan’s office. It says “Bob’s Meet and Greet,” a folksy way to invite visitors to chat with the company’s chief executive.

Behind his desk are carefully ordered books, family photos and memorabilia, like model planes acquired over his 37 years at the airline.

Southwest, which first took flight in 1971, embraces its heritage. The headquarters are named after the airline’s iconoclastic co-founder, Herb Kelleher. There is a preserved replica of his office in the building. His quotes are painted on the wall.

So are some of Mr. Jordan’s. He is leaving his mark on the company in other ways, too, overseeing major changes to the way Southwest operates. The moves come after a battle with Elliott Investment Management, a hedge fund that called last year for Mr. Jordan’s ouster and criticized the airline for adhering to “antiquated business practices from decades ago.”

The changes include getting rid of Southwest’s quirky free-for-all boarding process, introducing premium-priced seats and, most controversially, ending its generous free bag policy for all fliers. When pressed on the timing and thinking behind the changes, Mr. Jordan described them as offering customers more choices.

Southwest expects to make roughly $4 billion in additional profit as a result. Its shares are up since it unveiled the new strategy, which settled the fight with Elliott.