Podcast Summary: The Air Show

Episode: Southwest’s Big Changes are Done, Now What?
Host: Shayr Media
Guests: Jon Ostrower (Editor-in-Chief, The Air Current), Brian Sumers (Airline Observer), Brett Snyder (Cranky Flyer), Andrew Waterson (COO, Southwest Airlines), Tom Doxey (CFO, Southwest Airlines)
Date: February 2, 2026

Overview

This episode takes a deep dive into Southwest Airlines' recent strategic and operational transformations, featuring candid discussion with Southwest’s COO, Andrew Waterson, and CFO, Tom Doxey. Topics include the airline’s shift toward more industry-standard practices (like bag fees and assigned seating), the role activist investors have played, the carrier’s financial “moat,” product differentiation, network and fleet strategy, loyalty program evolution, and what’s next for the airline as post-pandemic dynamics reshape the U.S. airline industry.

Key Discussion Points and Insights

1. Why Shift to Look More Like Other Airlines?

[00:33–04:05]

• Question from Jon Ostrower: Why is Southwest adopting strategies (bag fees, assigned seating) that make it more like competitors?
• Andrew Waterson:
  • Differentiating features aren’t always what customers want now.
  • Customer preferences have changed with higher costs and new travel habits.
  • Service differentiation is rooted in experience and employee-customer interaction, not just policies.
  • Key advantages remain: strong network, cost discipline, and reliability.
  • Quote:

    “In the history of airlines, the most successful initiatives have been among carriers that have really differentiated themselves from the pack...” – Jon Ostrower, [00:33]
    “The unique policies we had were only unique in the last, let’s say, 10–15 years...it’s how you feel when you travel that can really differentiate you.” – Andrew Waterson, [01:17]

2. Southwest’s “Defensible Moat” and Strategic Ethos

[04:05–07:16]

• Tom Doxey:
  • Southwest boasts the strongest balance sheet in the industry; one of three airlines globally with investment-grade credit.
  • Margins and customer-focused initiatives are now key priorities.
  • Operational and product “moat” includes market dominance in many top U.S. cities, strong brand loyalty.
  • Quote:

    “We have brand net promoter scores that are higher than they were prior to us announcing some of the changes...” – Tom Doxey, [09:48]
    “You put all that together and I really like where we stand.” – Tom Doxey, [07:14]

3. The Role of Elliot Investment Management

[07:16–09:48]

• Brett Snyder: Raises the impact of activist investors (Elliot) on recent changes.
• Waterson & Doxey:
  • Elliot acted as a catalyst, accelerating needed changes and spurring faster execution.
  • Internal improvements also credited to incoming talent and board changes.
  • Quote:

    “They’ve been a great catalyst. People have accused us of moving slowly, and I think that's a fair criticism. ... The catalyst of Elliot — move faster gang — I think, was let out for us.” – Andrew Waterson, [07:55]

4. Taking Changes Too Far? Customer Reactions and Execution Excellence

[09:48–11:45]

• Some initial reluctance internally on bag fees and boarding changes, but improvements in customer satisfaction (NPS) and financial performance validate the decisions.
• Free Wi-Fi with T-Mobile, larger bins, in-seat power, and seat upgrades rolled out smoothly.
• Quote:

  “I think he [Bob] said it well on our earnings call. In his 38 years at Southwest and in the industry, his comment was he has not seen this level of change at any airline in this short a period of time, let alone to have it executed as well as it was.” – Tom Doxey [10:52]

5. Product Offerings & “Are You the 4th Legacy Carrier?”

[11:45–14:45]

• Brian Sumers: Critiques lack of first class, lounges, food options, and unimpressive Wi-Fi.
• Response:
  • Strong NPS proves product is resonating.
  • Southwest is not just another network carrier; it’s following its unique path, not copying Delta or United.
  • Quote:

    “I love our hand. I love our hand better than the hand that any other airline in the US has.” – Tom Doxey, [13:25]
    “We clearly are not copying United or Delta. We've staked out a different way to serve our customers.” – Andrew Waterson, [13:58]

6. Food Offerings: The Cheese Plate

[14:45–15:19]

• Humorous exchange about the lack of cheese plates and more robust food, referencing past attempts at shelf-stable cheese on Hawaii flights.

  “I wanted to force you to eat shelf-stable cheese on the way to Hawaii, but Tony was like, ‘No, Andrew, we have to change the offering.’ So we changed.” – Andrew Waterson, [15:04]

7. Network Strategy & Capacity Reallocation

[15:19–19:11]

• Reallocation Driven By:
  • Margin improvements enabling shifts from low to high-performing markets.
  • Assigned seating and premium seats allow more revenue on longer flights.
  • Fleet deployment (175 seaters on longer haul routes), red-eye flying, and network optimization all ongoing.
  • Quote:

    “So now a longer flight, ... is now likely to do a lot better with assigned seating, extra legroom. So we're going to redeploy... to longer stage length markets out of Dallas.” – Andrew Waterson, [16:50]

8. Fleet Choices: Sticking with 737s and the A220 Question

[19:13–24:45]

• A220 at Breeze: Tom Doxey acknowledges its virtues, but Southwest sticks with a single aircraft (737), citing efficiency and productivity.

• Do they need a smaller jet?

  • Introducing a second type brings complexity and cost.
  • No plans for E175-sized aircraft due to pilot agreements.
  • Prepared for eventual future fleet transition, but “hundreds” of 737 MAXs still on order.

    “We like the aircraft we have.” – Andrew Waterson, [22:14]

• Wider or Larger Aircraft?

  • Management time currently focused on completing transformation.
  • Nothing off the table for the future, but focus remains.

    “Our boss has talked about it, ... if our customers want something, we need to provide.” – Andrew Waterson, [25:19]

9. Loyalty Program Evolution

[25:48–29:51]

• Loyalty is strong, but Southwest seeks to expand partners and options (including possible high-fee credit cards and lounges).
• Not aiming to fully mimic legacy programs but sees revenue potential in enhancing the program.
• Acknowledges previous criticism for “eighth rate partners” but says that's evolving.

  “We intend to have more attributes to our loyalty program to give more options for using it or earning from it. ... What you see is not where we'll end, but you have to start somewhere.” – Andrew Waterson, [27:44]

10. Lessons Learned from Hawaii Launch

[29:51–31:55]

• Entering Hawaii just before 737 MAX grounding and pandemic was poor timing.
• Post-pandemic, Southwest failed to nurture the market adequately—now corrected with improved financial results.

  “Don’t enter Hawaii just before your aircraft are going to be grounded, nor enter Hawaii just before a pandemic.” – Andrew Waterson, [30:36]

11. Bag Fees: Necessary or a “Money Grab”?

[31:55–33:18]

• Admission: Not every change overlaps customer demand and financial benefit (bag fee less popular), but most changes serve both.

  “The overwhelming majority of the items that we’ve done ... you get the Venn diagram that overlaps...not every single one... but the overwhelming majority of what we’ve done we’ve seen the net promoter scores come up and the financial impact.” – Tom Doxey, [32:34]

12. Leadership Succession and Culture

[33:18–34:33]

• Playful speculation on succession after CEO Bob Jordan.
• Both execs express deep respect for Jordan’s servant leadership.

  “Bob’s incredible...almost four decades being a servant leader... and Bob starts it from the top.” – Tom Doxey, [33:48]

Notable Quotes & Moments

• “We are Southwest Airlines and we've staked out our own path as usual. And that path is leading us to prosperity equivalent to the others who are following the Delta trail.” – Andrew Waterson, [14:17]
• “If our customers want something, we need to provide.” – Andrew Waterson, [25:27]
• “You have to start somewhere. And once again, back to what Tom said—things went well. Things have gone well. Like, no one's talked about how that didn't go well.” – Andrew Waterson, [28:07]
• “Don’t enter Hawaii just before your aircraft are going to be grounded, nor enter Hawaii just before a pandemic. Those are two things one should never do.” – Andrew Waterson, [30:36]

Important Timestamps

• Differentiation/Big Changes: [00:33–04:05]
• Financial and Product Moat: [04:05–07:16]
• Elliot Investment Role: [07:16–09:48]
• Customer Response & Execution: [09:48–11:45]
• Product Critiques/Where Next: [11:45–14:45]
• Food on Southwest: [14:45–15:19]
• Network/Capacity Allocation: [15:19–19:11]
• Fleet Development: [19:13–25:48]
• Loyalty & Partnerships: [25:48–29:51]
• Hawaii Lessons Learned: [29:51–31:55]
• Bag Fees Rationale: [31:55–33:18]
• Leadership/Succession Banter: [33:18–34:33]

Tone & Final Thoughts

The conversation balances Southwest’s reputation for fun, approachable culture with frankness about change, performance, and competitive realities. Both executive guests are transparent about mistakes and learning curves (such as the Hawaii expansion) and are bullish on the company’s financial health, customer loyalty, and unique operational culture, even as it adapts to a more industry-standard product set.

For listeners interested in airline business strategy and the delicate balance between brand identity, operational efficiency, and financial performance, this episode offers a rare and engaging look inside one of America’s most iconic carriers.