Southwest is about to add a new fare class. Here's why and what perks it might include (for more money)
Southwest Airlines has been teasing travelers and investors for months with talk of a new fare category featuring perks not offered to buyers of its cheapest tickets.
In December, the airline's chief commercial officer said the undisclosed perks are something for which customers will "happily pay a little bit more."
"This will be an upsell that will be for enhanced attributes," Andrew Watterson said.
On the airline's earnings call in late January, new CEO Bob Jordan touted the new fare category, which will boost Southwest's ticket classes from three to four, as a promising revenue initiative for 2022.
Last week, Southwest Chief Financial Officer Tammy Romo said more details on the new fare offering, which will roll out by June, are "coming soon."
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The drawn-out disclosure – the airline has been testing names for a fourth fare category since at least 2019 – is classic Southwest marketing and has prompted speculation online about what the new fare category, and those above and below it, might look like.
Frequent guesses on the possible perk(s) to entice travelers to buy up to the unnamed new ticket type from the cheapest ticket, called Wanna Get Away: early boarding (Southwest famously doesn't assign seats), extra frequent flyer points, free Wi-Fi or more ticket flexibility.
There have also been plenty of hot takes on the changes in general since Watterson discussed the new fare at length, with few details, at the airline's investor day in December.
"Sigh. more fare inflation under the guise of 'choice,' " lamented one poster on the Southwest forum on FlyerTalk.
Here's what travelers need to know about Southwest Airlines tickets, why the airline is shaking things up and possible options on the table.
Southwest Airlines tickets 101: Wanna Get Away, Anytime, Business Select
Southwest, the nation's largest domestic carrier, currently has three ticket types:
► Business Select, its priciest fare, which is refundable and comes with a prime boarding position, an alcoholic beverage and other perks;
► Anytime, a similarly pricey ticket that is also refundable but doesn't come with the Business Select extras; and
► Wanna Get Away, its lowest-priced ticket.
All three earn frequent flyer points, with business select tickets having the highest multiplier, at 12 times the fare, Wanna Get Away the fewest, at six times the fare.
All tickets come with two free checked bags and no ticket change fees, though travelers do have to pay any difference between the fare they paid and the going fare when they change a ticket – a pricey proposition when done last minute.
Why is Southwest adding a fourth ticket type?
Southwest's goal with the new fare category and expected changes to existing categories is simple: boost ticket revenue. Jordan told investors in January that the new fare offering combined with a new computer system to better manage fares will provide a "material boost" in Southwest's revenue beginning this year.
A new fare category with extra perks is designed to entice vacationers and small to medium size businesses who buy its cheapest tickets to buy up, though not to the degree the purchase of a refundable anytime or business select ticket would require.
The gap between Wanna Get Away tickets and the refundable tickets, at one time huge, has narrowed during the pandemic but the airline says it still sees room for a fourth ticket type.
"Our goal is to have four fare products with more modest buy-ups in between each of the fare products," he said in December. "That level of buy-up will be determined kind of on a market basis."
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It's no different than what budget carriers like Spirit and Frontier do with their fare bundles or American, Delta, United and others do with basic economy tickets.
"To me, it's just another iteration of that," said airline analyst Conor Cunningham of MKM Partners. "It's Southwest's take on that whole situation."
The bottom line, though: the new fare category amounts to a fare increase, he said.
"Typically a new fare structure just means a new price hike," Cunningham said. "If you're peeling it all back that's ultimately what it means."
Does Southwest Airlines have basic economy?
Southwest executives insist the addition of a new ticket type with perks will not turn its cheapest tickets into basic economy tickets, those no-frills tickets with lots of restrictions that were created to compete with budget airlines' bargain fares.
United, for example, does not allow passengers with basic economy tickets to board with a traditional carry-on bag. Those have to be checked, with an extra fee charged if it's checked at the gate.
"Just to double down," Watterson said on the airline's earnings conference call in January, "we will not take anything away from Wanna Get Away."
Travelers might not see it that way, of course, but the verdict will come when Southwest announces details.
Southwest wants to add perks to get you to pay more for your airline ticket: What's on the table?
Watterson said the new ticket type will have extras on top of those offered on wanna get away tickets, extras "for which we believe customers will happily pay a little bit extra."
Southwest already offers free bags, doesn't charge for seat assignments like many of its competitors and allows changes on any ticket. So what does that leave on the table, assuming the airline isn't going to add an extra legroom seat or start assigning seats overnight?
Cunningham said he has "no idea" what Southwest is cooking up but that the new fare category likely would include more frequent flier points.
Inflight Wi-Fi and/or a drink, each worth about $8 and already included in the business select tickets, are also possibilities, said Brett Snyder, who runs the Cranky Concierge travel service and writes the Cranky Flier blog.
"I think they’re just going to bundle the stuff that people might find useful," Snyder said, adding that he expects the new fare lineup to be underwhelming.
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A big perk that would get travelers' attention since Southwest has open seating: automatic check-in or some sort of boarding priority.
With no assigned seating, Southwest passengers line up by boarding position and choose any available open seat once on the plane.
The first slots go to passengers who buy the pricey business select tickets, followed by top tier frequent flyers and those who pay for the airline's EarlyBird check-in, which is $15 to $25 each way per person. Passengers in those groups are automatically checked in by the airline.
The rest of the boarding order is determined during online check-in, with travelers setting alarms to check-in precisely 24 hours before departure in hopes of nabbing a decent boarding number. The process gives many travelers anxiety and spurs endless debate about the practice of seat saving.
Southwest could include EarlyBird check-in, already a big moneymaker for the airline, as a perk or add another feature that allows passengers to somehow "cut" the boarding line. The pricier anytime tickets don't come with boarding priority, however, so the perks there would have to change in tandem, Cunningham said.
Southwest currently sells last minute boarding upgrades at the airport, when available, with the fee starting at $30 one way depending on the flight.
This article originally appeared on USA TODAY: Southwest Airlines ticket prices: Why a new fare is coming
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