Key facts
- Southwest Airlines is changing its policies on free checked bags and open seating.
- EVP Tony Roach stated these changes are necessary for long-term survival and sustainability.
- Roach described the shift away from open seating as 'changing the engine in the car.'
- Southwest's stock is up more than 25% over the last year.
- MGM Resorts has launched its first all-inclusive package due to shifting consumer habits.
- Barry Diller has proposed an $18 billion bid to take over MGM Resorts.
Southwest Airlines is undergoing significant changes to its core business model, including ending its long-held policy of two free checked bags and moving away from open seating. Tony Roach, EVP and Chief Customer & Brand Officer at Southwest, stated at Fortune's COO Summit that these shifts are crucial for the airline's long-term survival and sustainability, comparing the move away from open seating to 'changing the engine in the car.' He emphasized that the airline aims to be sustainable and is widening its offerings to include more premium options without trying to mimic competitors like Delta. Despite industry headwinds, Southwest's stock has risen over 25% in the past year, and Roach described the company as 'running better than it was before.'
In parallel, MGM Resorts is also adapting its value proposition in response to shifting consumer habits and tighter margins. Ayesha Molino, COO of MGM Resorts International, noted that customers felt they were not getting sufficient value from Las Vegas properties. In response, MGM has launched its first all-inclusive package, bundling various services into a single price to address affordability concerns. This recalibration occurs as media mogul Barry Diller has proposed an $18 billion bid to acquire MGM Resorts, believing the company has not yet reached its full potential. Molino acknowledged the bid but stressed MGM's focus remains on operational execution and delivering excellent guest services.