Southwest’s Big Price Increase Went Into Effect Last Week

You probably saw all the press touting Southwest’s new fare category, Wanna Get Away Plus, that officially launched last week. While yes, there is some good news here, it is also a sizable price increase for travelers who may value certain features over others. There are a lot of ways to look at this, so let’s get started.

When I wrote about this back in March, it was all theoretical. We knew what the product attributes would be, and we know that adding a whole new fare category would likely force the existing higher categories up to a higher fare level, but we didn’t know anything beyond that. Now, it’s live so we can take a look at the actual pricing differences.

To do that, we have to remember what the previous structure looked like. Here is that elegant graph that I loved so much showing filed fares between LAX and Phoenix from back in March.

Southwest Filed Fares Los Angeles (LAX) – Phoenix (PHX) March 2022

The structure was very simple. The Wanna Get Away (WGA) level had several pricepoints filed. As demand filled in, Southwest could close off the lowest fare buckets and push the price up higher. This structure was very different from the legacy structure before the pandemic.

After years of having the fully refundable Anytime fare at a much higher level, Southwest changed to filing those as a simple $30 bump above the selling WGA fare when demand was low. As demand picked up, it could close off the low version of the Anytime fare and make it $70 above WGA instead. Then Business Select was a $40 bump on top of the selling Anytime fare.

If we use real-world examples, the lowest filed fare here was $54.37 one way… and now it’s disclaimer time. That $54.37 includes the base fare and the 7.5 percent federal excise tax. It does not include the $4.50 segment fee, the $5.60 security fee, or the $4.50 passenger facility charge. So when the fare is filed at $54.37 from LAX to Phoenix, it will actually sell at $68.97. In other words, the $54.37 can never be advertised, but that’s just how fare filings work. For this particular market, assuming a nonstop flight, you can just add $14.60 to whatever prices I mention to understand the actual selling price. Now, back to our regular programming.

In that old structure, if you paid the $54.37 and it was a lower-demand flight, you could then buy an Anytime fare for $84.37 and Business Select for $124.37. If it was a higher-demand flight, the Anytime fare would be $124.37 and Business Select would be $164.37. There were also some super high filed fares for the most full of full flights, but we don’t need to get into those details.

Now what’s happening? Well, the base fares conveniently have not changed at all for WGA. That makes a comparison much easier.

Southwest Lowest Fares by Category in Los Angeles (LAX) – Phoenix (PHX)

So, the $54.37 WGA fare remains the same, but now the price you used to pay to get the low Anytime fare — $84.37 — is reserved for WGA+. Anytime is now no lower than $134.37, a 90+ percent increase. The buy-ups above that remain the same at $40, but that’s $40 on top of the $50 higher Anytime fare. I should note that these buy-ups appear to be the same level in every single market except for interisland in Hawai’i where the buy-up amounts are more compressed.

There is a caveat here. As you start getting higher and higher up the ladder, Southwest has kept its highest fares (those on the right of the top chart) at roughly the same level. So there will effectively be a cap on those upsells, and at higher levels the buy-up may be compressed down depending upon the market.

Of course, not everyone who bought Anytime before will buy it now. The key is knowing what the difference in price is by attribute. And there are really 4 key attributes here that see a change in price.

• Transfer credit to other traveler – wasn’t possible before so you had to buy fully refundable fare. Now you can buy WGA+ for either the same price as Anytime used to be on low-demand flights or for $40 less than Anytime used to be on high-demand flights.
• No-cost same-day change/standby – required Anytime before but now it’s possible with WGA+, so that means it’s also no change in price on low-demand flights and $40 less on high-demand flights.
• Refundability – Still requires buying Anytime, so it is now $50 higher than before.
• Earn 10x Rapid Rewards points – Still requires buying Anytime, so it is now $50 higher than before. The old price will now get 8x points as a WGA+ fare.

If you want refundability, it just got more expensive. But for some, maybe the idea of having name transferability will be enough. If so, that means the cost is the same or cheaper than it was buying Anytime before. The same goes for someone who purchased Anytime before just to get that ability to do a same day change without charge. So there are saving opportunities here.

I should also mention that while Anytime is $50 higher now, there are new benefits added as part of this change. Most notable is the inclusion of EarlyBird which used to be a $15-$25 add-on regardless of what fare you purchased. It also includes access to priority lanes at the airport. That may not be $50 of value, at least it wouldn’t be for me, but it helps to offset the increase while still making it a viable buy-up for some.

It’s also important to think about this in context. Yes, this is a big price increase for those buying Anytime or Business Select now vs last week, but it’s still a huge discount compared to where Anytime used to be priced before the pandemic. If you think of the previous structure as a pandemic-forced shift, you can think of this change as adapting it to be more sustainable for the future.

In the end, this should result in a nice bump in revenue for Southwest if it works as planned. That’s the whole point of doing this, and the way the structure is put together, it seems like it should have the desired impact. Down the line, maybe Southwest varies the buy-up amount by market, but for now, it should do the trick.