Rapid Rewards revamp is just one of Southwest Airlines’ big changes
Southwest Airlines rebooted its popular Rapid Rewards program this week, and the transition to a more sophisticated frequent-flier program is much like the makeover the carrier itself faces: a necessary, risky upgrade that is certain to alienate some die-hard fans.
Passengers won’t be able to check their rewards or request free trips for two days, Sunday and Monday, while the new awards program is loaded to Southwest computer systems. Travelers flying on previously booked awards tickets won’t be affected by the outage, Southwest spokesman Chris Mainz said.
The $100-million revamp of the program will tie travel awards to the amount that passengers spend to fly, similar to programs at JetBlue Airways and Virgin America. While critics claim the Texas-based carrier will shortchange passengers who take short trips, Southwest Chief Executive Gary Kelly maintained that most customers would reap greater benefits.
“It’s better for 90 out of 100 customers,” Kelly said. “It was designed for customers. The whole mission for Southwest was to win customers, and not by nickel-and-diming them with the frequent-flier program.”
The Rapid Rewards revamp is the first in a series of seismic changes ahead for Southwest’s customers and employees. The carrier is absorbing its largest low-cost competitor, AirTran Airways; buying its first larger Boeing jets certified for over-water flights; and overhauling its reservation system in preparation for launching its first international service.
Kelly labels these initiatives the “four big ideas” that will “create momentum” for Southwest over the next decade. “We want to be America’s airline,” Kelly told the Chicago Tribune last week. “We feel like we’ve given America the freedom to fly … and we’re still growing, expanding.”
The course plotted by Kelly is a big departure for a scrappy carrier that for 40 years has sought to set itself apart from bigger rivals, whether by dressing flight attendants in hot pants in the 1970s or through its current promise not to charge fees for checked bags.
But some longtime flyers fret that Southwest is in danger of becoming just another big airline as it takes on more of the scope and complexity of network carriers like American, United and Delta. The debate over Southwest’s future has even raged in reader responses on its “Nuts About Southwest” corporate blog.
“For an airline that prides itself on ‘every seat being a first-class seat,’ it sure seems like they are now trying to create a class structure, based on what people spend,” said an anonymous writer, responding to a Jan. 7 post on the Rapid Rewards reboot.
Southwest has attracted a large, loyal following by offering a simple, streamlined product over the last decade as it vaulted to the top ranks of domestic carriers, analysts said. Kelly’s challenge is to keep that simplicity of message and product as Southwest evolves.
“While they are a big airline, they come across as a small airline to some people,” said Randy Petersen, editor and publisher of InsideFlyer magazine.
Although Southwest carries about 30 million more passengers each year than it did in 2000, the carrier is still much the same: It hires friendly extroverts, features an all-Boeing 737 fleet, offers a single class of service and doesn’t provide reserved seating.
Kelly must remake Southwest to keep shareholders happy and offset the billions of dollars the carrier is losing by forgoing fees, said Vaughn Cordle, chief forecaster at market research firm AirlineForecasts. “Because they’ve locked themselves into this low-fare, low-cost marketing model, it is hard for them to go beyond that without breaking that marketing theme,” Cordle said. “But they’re going to have to.”
Passengers may balk. It was the complexity of the Rapid Rewards overhaul, unveiled in early January, that drew outrage — and comparisons to New Coke — from Southwest loyalists. The old version was the simplest frequent-flier program in the industry: Travelers earned one free round trip for every 16 segments they flew on Southwest in a two-year period, said mileage guru Petersen.
The updated version uses ticket prices to determine the points awarded to passengers, as well as the number of points needed to claim free flights. Based on the fare they select for a flight, passengers earn six, 10 or 12 points for every dollar they spend. To claim a free ticket, passengers must redeem 60, 100 or 120 points for every dollar that paying travelers would be charged.
It sounds complicated, but the program will seem intuitive to travelers who use the calculators that Southwest is building into its travel search pages, Kelly said. “While it may not be simplistic like it was, it is still going to be simple.”
Southwest simply outgrew the old Rapid Rewards model as it began offering longer flights and looked to add overseas destinations, Kelly said. “The way the program was is not well-prepared to deal with international [flights],” he added. “At what point do you say we just can’t afford to give you a free ticket to Europe for 16 one-way trips between Chicago and St. Louis?”
Travelers most upset with the new program are bargain hunters who flew lots of short trips on Southwest. A passenger searching for the shortest, cheapest flights — $50 fares, for example — will now need to buy 20 segments to gain a free trip.
But most customers pay a blend of fares, Kelly said. “We looked at our customer activity, we know what they’ve done, and 90% of them are better off with the new program because they’ll get more credit with what they spend as opposed to the way they were spending before.”
Despite the negative feedback online, Kelly said the new program has scored better in consumer tests than Southwest’s numbered boarding system initially did. That system was another controversial move.
“It will work,” Kelly predicted. “It will work well.”
