Southwest Airlines adding fourth fare level to boost revenue

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Southwest Airlines will add a fourth fare category as part of changes designed to attract more business travelers and boost revenue.

The new fare level will be priced higher than Southwest’s cheapest tickets but below the airline’s top two fare categories. Southwest executives think this will fill the large price gap between the cheapest fares, called Wanna Get Away, and more-expensive tickets.

Consumers who buy the new fare level, called Wanna Get Away Plus, will get 33% more frequent-flyer points than the basic ticket, and they will be able to transfer the value of a ticket to another Southwest customer.

It’s the first major change in Southwest’s fare structure in 15 years. Airline officials said the changes announced Thursday will take effect in May or June.

Airlines frequently tinker with fares and fees to squeeze more revenue from passengers. In recent years, Delta, American and United have reacted to competition from discount airlines by rolling out new, bare-bones “basic economy” fares. The big-three airlines then nudge customers to pay more for regular economy seats that include the amenities that they have come to expect.

Southwest hinted at the changes back in December without giving details. The new fare level is among several moves, including a new credit-card deal with Chase Bank, that the Dallas-based airline hopes will collectively boost annual revenue by between $1 billion and $1.5 billion next year.

Executives declined to say how much more Wanna Get Away Plus seats will cost compared with cheaper seats, but it will vary by flight. Besides more frequent-flyer points and the ability to transfer credit, Plus buyers will be allowed to fly standby at no extra cost, even if there is a higher fare for the new flight.

Southwest will also add early-boarding privileges to the next priciest fare, called Anytime, to avoid cannibalizing sales of full-price tickets. Early boarding is a perk because Southwest does not assign seats, meaning that the last passengers to board a crowded flight wind up in middle seats.

Andrew Watterson, the airline’s chief commercial officer, said all the changes should be particularly appealing to business travelers. Southwest is trying to take more business travel away from Delta, American and United.

Southwest’s most expensive tickets, called Business Select, are fully refundable and include early boarding, a free drink, and the most frequent-flyer points. Anytime tickets are also refundable, while Wanna Get Away ones are not. All three include up to two checked bags for free – something other U.S. airlines don’t offer – and free ticket changes.

A majority of Southwest customers buy Wanna Get Away fares.

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5 thoughts on “Southwest Airlines adding fourth fare level to boost revenue

  1. Will IND get more flights in normal-sized aircraft? Granted, the E-175s are comfy enough but the CRJs are cramped.

    For a relatively large and quite attractive airport, flights are scarce and the preponderance of smaller jets makes Indy appear as a backwater. One recognizes that the proximity (close in terms of flight time and distance) of truly major international hubs, Chicago and Detroit, will always affect IND.

  2. I’ve always seen the smaller jets as a necessary evil with short flights to a nearby hub since IND is not a hub of it’s own I’d rather have more frequent flights on a smaller jet compared only one or two options for getting to Chicago or Detroit. What’s been killer to me is that the number of those smaller jet flights were also cut back due to the decline in business travel, so you’re more likely to have a long layover in Detroit or Chicago.

    After Southwest cut back on their flights and started having problems overcoming weather issues without canceling a bunch of flights, I’ve given them a wide berth.

  3. They add early boarding priviledgesbto a higher fare so those of us who earned A list boarding by being loyal Southwest fliers will end up in the Bs.

    1. Dominic, I fly monthly with them and have really come to appreciate B boarding passes. It offers you the best options for window or aisle, but still picking who you want to sit by especially for full flights when you can pick a smaller couple who’s already sitting in the aisle and middle seat. When you get on early you have zero say over who you sit with.