January 11, 2011 by staff
Southwest Airlines, (AP) – Southwest Airlines is the overhaul of its frequent flyer program with modifications intended to push customers to buy tickets at higher prices by allowing them to earn bonus flights faster.
Southwest says passengers will be able to redeem points for a flight with no blackout dates. Southwest holders credit card will be able to redeem points for international flights on other airlines.
CEO Gary Kelly said the overhaul will bring “hundreds” of millions of dollars in additional annual revenue within three or four years.
Southwest plans to announce changes on Thursday and start the new program on March 1.
Since its inception in 1987, Southwest Airlines Co. ‘s Rapid Rewards was perhaps the easiest program loyalty in the airline industry. In most cases, customers won a credit for each flight – two for a round trip – and got a free flight with 16 credits. Miles and rates did not matter.
But customers have complained about not being rewarded for long drives, could not win international flights, and credits expired in two years, no matter what. Now, to match other airlines, southwest expand the credits if there is some activity on the account.
The changes will make loyalty program in South-West, is more complicated but also more suited to its best customers – business travelers who pay higher tariffs.
Customers can earn points and six, 10 or 12 for every dollar they spend based on whether they choose the cheapest medium or the highest rate.
For example, Southwest and listed a price for a bottom 94 Feb. 1 flight from Dallas to Baltimore. This wins 564 points (6 times 94). The price of intermediate level was $ 405, which would lead to 4050 points (10 times 405), and high rates of 425 and would be rewarded with 5,100 points.
“We gave customers a reason to pay us more money, Kelly said.” We know we have customers who choose a higher rate because they will get more Rapid Rewards points. ”
When the collection, customers spend 60, 100 or 120 points per dollar according to the fare level. It should be 5640 points to buy that “Want to Get Away” fare on 1 February (60 times 94), but 51,000 points for a “Business Select” trip, which includes equipment, including priority boarding and a free drink.
On many large U.S. airlines, customers receive one point per mile and usually pay 25,000 miles or more for a roundtrip award. Southwest borrowed the approach used by JetBlue Airways and Virgin America, which points based on how much customers spend on tickets.
Southwest does not fly outside the United States, but plans to allow customers to redeem points for international flights under a marketing agreement with Maritz Loyalty. Southwest had few details this week.
Kelly said the Dallas-based southwest, which carries more passengers than any other U.S. carrier, spent five years and nearly $ 100 million to design the new program.
Tim Winship, a veteran of the airline industry, which publishes FrequentFlier.com, these amendments Southwest has long been.
“Their program has been lagging for years,” said Winship. “It is head and shoulders above the old program, and I guess that will stack quite well against programs of legacy carriers” such as American, Delta and United.
But Winship warned that Southwest is still considered by many business travelers vague because it does not have first-class cabins and airport lounges.
Jay Sorensen, a consultant loyalty marketing, said few people choose a carrier solely for its frequent flyer program, “but there is a large market of business travelers and it extends the ability of the Southwest to obtain “.
Southwest officials acknowledged that the changes make their loyalty programs more complicated. It is a remarkable admission for long-leads to keep things simple to work with a single type of jet.
Copyright © 2011 The Associated Press. All rights reserved.
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