It is easy to read too much into small changes in airline loyalty programs. But this week’s announcement from Southwest Airlines – lowering the qualification requirements for some elite status tiers – could signal a significant shift for the carrier’s approach to frequent fliers.
By lowering the tier requirements and making credit card spend count double toward tier requirements, we’re able to deepen engagement with our brand and cobranded credit cards, while maintaining the core program values that our Customers know and love—including unlimited reward seats, no blackout dates, and points that don’t expire.
– Jonathan Clarkson, Vice President of Marketing at Southwest Airlines
Lower qualification thresholds
For travelers who earn status by accumulating trips on Southwest the qualification requirements will drop by 20% in 2024 for the A-List and A-List Preferred tiers. The tier point qualification levels remain the same, but earning the points gets a bit easier, so long as one has the co-branded Chase Credit Card.
Today spending $10,000 on the card earns 1,500 tier points. Starting in 2024 the spend requirement halves, with just $5,000 charged netting the 1,500 tier points.
Cash & Points, with a catch
The company plans to offer cash & points redemptions beginning in 2024. With redemption rates already relatively fixed the value proposition comes from enabling passengers to use their points at smaller thresholds. But the program also comes with a catch.
Tickets purchased via the Cash & Points offering will not be eligible to Rapid Rewards points, nor tier points towards elite status. That puts a damper on the micro-redemption idea, as those travelers would potentially forego significant earnings on a booking, just to redeem a small number of points.
Free drinks for A-List Preferred elites
Finally, the revised Rapid Rewards program will also offer free drinks on board to A-List Preferred passengers. On flights longer than 176 miles (where the full drink service is offered) A-List Preferred passengers will receive coupons on their boarding pass for two premium drinks on board. The free drinks program launches on 6 November 2023, ahead of the new qualifying rules.
JetBlue remains the leader in the US in terms of free drinks for elites, offering up to three per flight for all Mosaic tiers.
In early September Southwest ran a bonus earnings promo for its Companion Pass tier, similar to one it ran in 2022. So maybe that’s not a sign things are substantially different headed into the waning months of 2023.
But the company also ran a Buy one, Get one 50% off base fare sale in early August. Wanna Get Away fares recently were included in free same-day changes, making that available across all the company’s fares. And Business Select passengers now get free Wi-Fi on board.
That’s a lot of changes in a short timeframe.
Undoubtedly some of the adjustments (e.g. same-day change rules) are a reasonable response to competitive pressures. Shifting the loyalty program, however, could also be seen as a signal that the company is struggling to backfill its reduced business traveler volumes with repeat leisure customers. Or that off-season demand is waning. Is Southwest facing similar headwinds as the ULCC players who had to slash fares to keep seats filled? Is the loyalty program less of a draw than it once was, especially for the short-haul road warriors who have returned to the skies?
Perhaps the company will shed more light on these trends and what the bigger travel demand picture looks like in its upcoming Q3 earnings call.
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