Let’s re-write the scenario.
There is one empty seat. The standby gets it.
Oops. After boarding here comes a husband and wife (with internet fares). They don’t want to fly separately. Don’t want to take a later flight.
So they get rewarded for being late by bumping off a passenger who paid full price at the counter?
That makes no sense. It’s unfair.
If they show up later than 20 minutes prior to scheduled push back, they have no rights to a seat and, in fact, could be substantially charged for having to change their tickets. A bumped pax, under those circumstances, would have a ton of recourse.
However, South West doesn’t sell seats on the web, except through their own site. They don’t interline bags or accept other airlines’ tickets. Therefore, the various levels of tickets and priority are fairly easy to work out for them.