Dallas-based Southwest Airlines says flight credits for canceled flights will no longer expire, another attempt to buck its competitors and set itself apart from the rest of the airline industry.
Southwest’s flight credits previously expired after one year, but the carrier will now let competitors keep them permanently as long as they cancel their tickets at least 10 minutes before a flight.
The new policy only applies to all flight credits that have not yet expired, even those issued before today.
The announcement comes as Southwest Airlines announced a second-quarter profit of $760 million on record high $6.7 billion in revenue as higher ticket prices and surging demand overcame more expensive fuel costs. Southwest’s profit was higher than any of its major network competitors at American, Delta and United, which all reported their first profit without government aid since the pandemic began.
The new flight credits policy comes four months after Southwest Airlines announced its new Wanna Get Away Plus fare category, a fourth tier of tickets that allows customers a handful more perks than the base tickets such as same-day flight transfers and the ability to transfer credits to others. Wanna Get Away Plus tickets are priced between its cheapest and middle-tier tickets.
“The pandemic caused an extremely high number of customer flight cancellations during 2020 and to a lesser degree last year, and even the beginning of this year with Omicron wave,” said Southwest Airlines Chief Financial Officer Tammy Romo. “As a result, we have had more flight credits outstanding than normal.”
Romo said flight credits are a small percentage of overall revenue.
Bob Jordan, who took over as the Southwest Airlines CEO in February after more than 30 years at the company, has faced pressure and questions about whether he would reverse course on some of Southwest’s long-time signature strategies, such as no bag fees and open seating. Instead, the airline has added another customer-friendly perk.
“Our customer research and feedback tells us that flexibility has become even more important to customers over the past two years,” said Chief Commercial Officer Andrew Watterson. “Therefore it’s important to us to deepen our commitment to flexibility and the ease of doing business with Southwest Airlines.”
Other airlines have followed some of Southwest’s examples. In 2021, carriers such as Fort Worth-based American Airlines announced it would drop fees to change flights, a long-standing practice at Southwest. Delta and United made similar policy changes.
Jordan cited the new flight credit policy, along with $2 billion in investments for better Wi-Fi, power ports and larger overhead bins on new aircraft as a way the company is trying to add more perks for customers without extra fees.
