Southwest Renews Chase Co-Brand Deal, Will Reveal New More Expensive Fare Type In 2022

Southwest Airlines shared with investors on Wednesday that they’ve renewed their credit card co-brand deal with Chase. This comes as no surprise,

  • It’s very difficult for a new bank to come in and displace an incumbent with a large cobrand portfolio. These deals are very expensive (so only a limited number of players) and the incumbent with its installed cardmember base, has an advantage. Plus it’s risky to change, and large companies will be reluctant to take big risks without a lot of upside.

  • Chase just announced improvements to its Southwest cards and they wouldn’t be doing a product refresh if they were losing the product.

  • Chase also pre-purchased $600 million in Rapid Rewards points during the pandemic. The relationship was going well

Southwest did a head fake as it renegotiated its card deal last time. But brands always do this, use other banks as a stalking horse to get a better deal. The card is integral to its strategy in fact offering customers Hawaii flights as an inducement to rack up Rapid Rewards has even been a piece of their network strategy.

While their flight attendants union contract doesn’t require inflight card pitches, since Southwest proposed it a year ago as a way of avoiding layoffs before the government threw billions at the airlines I wouldn’t be surprised to see the idea return.

Southwest carries a higher percentage of award passengers than anyone else. Still the airline estimates they have over $4 billion in unredeemed points. But those who aren’t redeeming will be interested in watching the new fare product Southwest plans to introduce in 2022.

The fares will appear in a fourth column alongside Southwest’s current Wanna Get Away, Anytime and Business Select offerings.

Details are still under wraps, but Southwest Executive Vice President and Chief Commercial Officer Andrew Watterson said it will be above the airline’s lowest priced Wanna Get Away category and offer enhanced attributes “customers will happily pay a little bit more” for.

He stressed that the new product will not take anything away from other fares but offer something more.

It’s unclear what this new fare product will offer if they aren’t taking away anything like no change fees and free bags from the lowest fares, and assuming Southwest isn’t introducing seat assignments. Perhaps there will be bonus points and bundling of earlier boarding.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Early boarding, WiFi, maybe third bags? Really anything the airline sells could be fair game. And if it’s successful, expect to see it at other airlines. Most have talked about bundling too.

  2. I’ve often thought I would have “paid” Rapid Rewards to have wifi on the plane when $8 was just more than I could stomach

  3. @ Gary — Now, if they would install some F seats, they would be my favorite airline. If they would actually do such a thing, there may be a big opportunity for them to poach customers away from the Three Big Crooks.

  4. They stopped handing out peanuts a while ago. Evidently too many people were going into anaphylactic shock. 😉

  5. There are two REAL problems with SWA.

    First, as Gene notes, there’s no “good” seats for those who are willing to pay up for Business Select.

    Second, even if there were “good” seats installed, the 50 individuals who pre-board ahead of Business Select on every single flight would get them anyway . . . and those paying for Business Select would still be in row 15.

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