For years, people felt confident booking Southwest Airlines tickets because they had no change fees. If their plans didn’t work out, they could use their entire purchase price as a credit towards a new ticket.
United Airlines CEO Scott Kirby said that this was an advantage that lost him a lot of business at America West, US Airways, and American Airlines. He always wanted to copy it, but couldn’t do so until he became the actual CEO of an airline.
So during the pandemic, Kirby made the change. He dropped change fees at United, and competitors quickly matched. And Southwest Airlines did something interesting to maintain their edge. While everyone else’s travel credits expired, Southwest eliminated expiration of credits.
- They said this wouldn’t actually be that costly to them. There’d be an accounting hit initially, but after that it wouldn’t be material.
- And it would win them a lot of business. Even the occasional travel – who might not be confident of using a travel credit within 12 months – would have confidence booking from them. It was a competitive advantage.
But Southwest’s financial performance deteriorated. They’re still making money, just not as much. They got an activist investor, who appointed industry veterans to their board. And they voted to walk away from everything that made them different and special. To name just a few:
- Their culture
- The value of their frequent flyer points
- Their small-d democratic seating and boarding
- Not to mention a long-term investment branding ‘bags fly free’
Southwest is also dropping the policy that travel credits don’t expire. Effective with tickets purchased (or changed) May 28, 2025, travel credits expire 12 months from date of original ticket purchase. Travel credits from basic economy fares expire 6 months from date of original ticket purchase.
And this creates a pretty absurd scenario. Basic economy is a way to segment price-sensitive leisure travelers from business travelers spending someone else’s money. That way an airline can discount and fill seats, without selling tickets for less to customers that are willing to spend more. Those price sensitive travelers tend to buy their tickets further in advance, too (in fact the old way of doing this was advance purchase requirements and Saturday night stays).
Someone buying a basic economy ticket far in advance, and cancelling travel six months later, will literally receive no credit at all. The validity of the credit is based on when you buy the ticket, not when you cancel travel and get a credit.
They went from credits never expire, to some customers are simply out of luck and get nothing. Because Southwest Airlines stopped caring – not just stopped caring about their customers, but stopped caring about differentiating themselves, offering a unique value proposition, in order to earn a product.
They’ve just given up. They know these changes are money-losers for them, but they’re going along with a milquetoast board to save their own jobs. And that’s just sad.
Can we please stop saying “activist investors” when really they’re CORPORATE RAIDERS. They’re stripping Southwest down and then will sell off whatever parts survive. We’ll be transitioning over to United or Delta. so that by 2026 we won’t be booking WN anymore at all.
Most other airlines give no credit for BE tickets when they are cancelled so WN is still more generous. Not a WN fan but please give them a little credit – they could have easily said BE tickets can’t be changed or cancelled for credit like most other US airlines. Everything shouldn’t be framed in the worst way possible. Of course that gets clicks and generates comments so nothing will change
Hopefully someone sues about changing the policy about miles never expiring.
@ AC: WN travel credit policy was grapes. Other airlines were raisins. WN is withering on the Elliott vine. The totally of WN changes are worse than the Luka trade. Dallas is stoopid.
It turns out… corporations can lie. Wow, so they are just like ‘people,’ after all! Who knew?!
Maybe consumers need better protections… OR, we can ‘let it fail,’ which for Southwest seems inevitable. Still, these under-regulated programs are ripe for corruption, moving goal posts, and devaluation. The good ole days are over with this, but for a few.
Anyway, many thanks to Elliott (mis)Management! Hope y’all timed the market ‘volatility’ juuust right!
@Breton K Lobner — There’s little money in this potential ‘class action’ suit, so I wouldn’t expect anyone to ‘sue,’ but this really is the opportunity for a regulator, whether it’s FTC or DOT, etc. to step in and address passengers concerns, enforce clear rules, etc. Probably nothing will happen under the current administration though. Sowie.
@Principal Lewis — Oh man, Nico Harrison isn’t even safe on VFTW!
@1990 — Liars!! Liars everywhereee!
One thing I just realized is that one way Southwest BE is inferior is because there are only 737s. I’ve done my share of BE on other airlines but almost only on CRJs or Embracers and therefore guaranteed a window or aisle. Southwest I imagine you’d have a high chance you get stuck in the middle.
I heard it said that Southwest is a Spirit experience at a Delta price …. A big loser for the flying public. They better become price competitive once they strip out all the benefits …. Otherwise they’ll be in big trouble. I’m certainly not going to pay more to fly them where I might now because they’re a simpler, stress free …. No bag fees no seat fees …. All that goes away
“They got an activist investor, who appointed industry veterans to their board.”. Which airline were these “industry veterans” from – Eastern or Pan Am?
The biggest advantage southwest had for me was ease of changes, rebooking, and no worry about bags and seats. The lack of credit expiration was a very nice feature among a host of negative changes. Now they’re just one of a bunch of similar options, and likely in the bottom half unless you have a companion pass.
I am still a huge fan of the Companion pass which I earn every two years via bonuses on their business and personal credit card. We are retired and make a good number of trips per year so it pays for us as a couple to have the Companion pass. And with the top of the line credit card we get some upgrades to A1 boarding, transfer points between us and free bag, even with the new policy. So, we are still fine. It is not all doom and gloom. And since we purchase most of our tickets with points, the points will always go back into our account if we cancel. SW is still great for us.