Southwest ditched free bags and MGM added all-inclusive perks: how the travel industry is reinventing itself to survive

If Spirit Airlines’ abrupt collapse sent a warning across the travel industry, it’s that resistance to change can carry real consequences. That reality is now shaping decisions at companies where long-standing business models are being reworked in response to shifting consumer expectations and tighter margins. Few shifts have been more visible than at Southwest Airlines, where recent changes—ending its long-held policy of two free checked bags and moving away from open seating—cut to the core of what the airline has long been known for. But speaking at Fortune’s COO Summit on Tuesday, Southwest’s EVP and Chief Customer & Brand Officer Tony Roach acknowledged the magnitude of the changes, comparing the shift away from open seating to “changing the engine in the car.” He argued the moves were necessary for the airline’s long-term survival—not a departure from its identity. “We are a brand that’s been iconic, but we want to be sustainable,” Roach told a crowd of execs at the “The Bold Bets That Are Reshaping Customer Experience Today” panel. “And so fundamentally we need to change our business model, so that we have the future to look forward to.” Southwest has also pushed further upmarket, adding more premium offerings to compete for higher-spending travelers. But Roach said the airline is not necessarily trying to mimic larger rivals. “All we’re doing is widening in aperture to be able to add more premium into the mix,” he said. “It doesn’t mean we’re trying to be Delta, because we don’t think we need to be Delta to be successful.” Despite headwinds in the airline space in particular due to rising fuel prices, Southwest’s stock is up more than 25% over the last year. Roach described the company as “running better than it was before.” Shifting consumer habits pushed MGM to launch its first all-inclusive package—now a takeover bid is raising the stakes Southwest is not alone in having to rework its value proposition. MGM Resorts—best known