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Southwest Airlines new loyalty program

No blackout dates on Southwest Frequent flyer tickets

Jan 09, 2011

Southwest Airlines will introduce a new loyalty program today that rewards its high-spending customers and injects more flexibility into redeeming awards.

The program, which takes effect March 1, converts Southwest's current credit model into a point-based system, introduces membership tiers, offers international flights by other carriers as awards and removes restrictions on the number of Southwest seats available for redemption.

Customers who buy "Business Select" tickets, the most expensive fares that come with perks like priority boarding and free drinks, will get 12 points for each dollar spent.

The airline's "Anytime" fares, which are fully refundable, earn 10 points per dollar. And Southwest's "Wanna Get Away" tickets, which are the cheapest, will deliver six points per dollar.

Customers can also earn a point for every dollar spent on Southwest's credit card, which charges a $59 annual fee.

Southwest's current program members will retain their credits after March 1 in the new program and can continue to add points. Each credit will be worth 1,200 points.

Points can be redeemed for flights on a sliding scale based on fare class. "Wanna Get Away" tickets will cost 60 points per dollar. In other words, a $100 one-way fare will require 6,000 points. "Anytime" fares can be redeemed at 100 points per dollar, while "Business Select" tickets will charge 120 points.

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"They want to increase their share of the business travel market. This is all about that," says Tim Winship of SmarterTravel. "The current program is woefully inadequate. It's never stacked up well against legacy carriers. This is very much an improvement in the loyalty program area for anyone who's a Southwest partisan."

Cashing in points for a free flight will be easier for business travelers who frequently buy the more expensive fares, since the points they earn will be higher than other leisure customers. The new structure also works to Southwest's advantage because customers are more likely redeem their points for cheaper "Wanna Get Away" fares and the carrier "will be displacing fewer high-paying passengers," Winship says.

The loyalty program of AirTran Airways, which Southwest agreed to buy last year, will also change to Southwest's new model once the acquisition closes.

While Southwest has gained a loyal following for its simple business model that offers cheap fares, customers have complained that its loyalty program - called Rapid Rewards - is limited and not "consumer friendly," Winship says.

Customers currently get one credit for each one-way ticket, and need to accrue 16 credits for a domestic round-trip flight. Credits expire after two years.

The new program removes expiration dates as long as customers engage in at least one "earning activity," such as redeeming awards, every two years. "Our currency expired and that'd lead to frustration for customers," says Kevin Krone of Southwest.

It also creates new tiers that rewards its most frequent travelers. Its current "A-List" membership will be changed to reflect the point system and new perks. To be an A-Lister, customers must earn at least 35,000 points, which entitles them to faster security lanes and boarding, free drink coupons, a new dedicated customer service phone line, priority status for standby flights and a quarter of a point for each additional point earned.

Customers who accrue at least 70,000 points will be in the new "A-List Preferred" category, which comes with all A-List perks, free in-flight Wi-Fi, and an extra point for each additional point.

Other new features:

No limits on seats. Southwest will abandon its practice of "capacity control" for award redemption, meaning all seats will be available for those cashing in. They will also eliminate blackout dates in the new program.

International flights. For the new program, Southwest has partnered with a third-party agent to allow customers to buy international flights using its points. Its current rewards program is limited to only domestic flights since Southwest doesn't fly internationally.

More commercial partners. Southwest expects to sign more retail and other travel industry partners to allow customers to buy their products using its points. Its current credit-based system "limits the number of partners" that can participate in its program, says Ryan Green of Southwest.

Gary Kelly, CEO of Southwest, says the new program will add "several hundred million (dollars) a year" in revenue.

No blackout dates on Southwest Frequent flyer tickets

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