The executives pretty much agree with you:
Kelly was asked on an earnings conference call whether the move could affect Southwest's results. He said ending overbooking would have a minor impact on revenue, but he gave no figures.
Chief Financial Officer Tammy Romo said doing away with overbooking would reduce costs — airlines compensate passengers for giving up their seats — which would offset some of the revenue hit.
http://www.latimes.com/business/la-fi-southwest-overbooking-20170427-story.html
WN improved its VDB and IDB numbers in 2016 compared to 2015, but WN still had a very high IDB rate compared to DL, UA and AA. The rate of IDB at WN was 1 passenger per 10,000 which was 10 times the rate at DL (0.1 per 10,000), double the rate at UA (0.43) and 50% higher than AA (0.64). To be fair, those rates for DL, UA and AA don't include their regional operations, where overbooking tends to be a bigger problem. If we included all the regionals in the mainline numbers, WN might not be such an outlier.
Except for Delta, WN also had the highest rate of VDBs in 2016 among the big airlines, which meant a lot of vouchers. Of course not all of them get used, but when they do get used, they replace actual cash, and that hits revenue.
https://www.transportation.gov/site...viation-consumer-protection/2017MarchATCR.pdf (page 34 of document, p 35 of .pdf)
The 15,000 IDBs last year probably cost WN less than $1,000 each all in, or less than $15 million. That's a rounding error for a $20 billion airline. The federal IDB max is $1,300, and with frequent flights, WN passengers probably don't have long delays on average to their destination, reducing the payouts.
For many years, AA had an extremely low rate of IDBs because it had perfected the computer modeling and forecasting to match overbooking to the rate of no-shows, but in recent years, the IDBs have increased. AA was also very generous in VDB vouchers to prevent IDBing passengers. Years ago, it was routine to hear offers at LAX of $1,200 to $1,600 in vouchers to persuade passengers to delay their trip to JFK by a few hours.