Southwest kicked off the post-summer travel season with a blast, offering its famed companion pass to anyone who booked a roundtrip ticket. This may sound crazy, but Southwest has done this before, and it knows what it’s doing. That being said, this is somewhat telling that the airline felt it needed to do this now. Could bookings be softening?
The promotion — which has now expired — was set up as follows:
- Register online with your Rapid Rewards account
- Book either one roundtrip or two one ways between September 6 and September 8
- Complete travel on those flights by November 17
- Earn a companion pass for travel January 4 through March 4, 2023
Normally, qualifying for a companion pass requires either 100 one way flights in a year or 125,000 qualifying points which you can get from things like using the Southwest credit card. And really, it should be expensive because of what you get for an entire year.
A companion passholder can bring their designated companion along on any revenue or award flight they’ve booked for just the $5.60 segment fee for domestic travel or any international taxes that apply. That can be huge value, depending upon how much you travel. And the addition of Hawai’i to the Southwest network makes it even more alluring.
The thing is… this sounds a lot better than it tends to be in practice. I qualified for a companion pass promotion when I did 8 flights in one day on Southwest a few years back, but I can’t remember if I ever even used it. We were planning on my wife joining me on a work trip to Cancun, but as always, life got in the way. It’s not often that schedules line up perfectly for something like this, especially when you have kids.
Despite the actual value of it, the perceived value is huge, so that makes it a great marketing tool. People want it, and only when they get it do they realize that it’s not worth as much as they’d thought.
So, when Southwest rolls out this promotion right after Labor Day, it sounds like a much bigger deal than it will be in terms of a revenue hit for Southwest. And in fact, it could be a revenue boost for the airline. Think about it this way. There are three things that were likely to happen when Southwest rolled this out.
First, people who had travel planned during the fall will pull forward their bookings in order to qualify for the promo. I fall into this category. I have a work trip to Phoenix in late October, and I hadn’t booked my flights yet. This promo made me book it earlier than I would have otherwise. It was a trip I was going to take anyway, so why not get the companion pass even if I never use it?
Second, people who had trips planned already who might not have flown Southwest decided to take Southwest instead since it was worth the companion pass. That’s a win for Southwest.
Third, someone really likes the idea of the companion pass, so they decide it’s worth it to just book an extra trip to get it. This is not prime leisure travel time at all. There’s a reason this only was good for travel until before Thanksgiving. So this is likely an extra discretionary trip. Again, it’s a win for Southwest during a time when loads are lower, especially on the likely short-haul routes where a quick trip would be most likely.
In the end this adds up to extra business for Southwest, and it pulls bookings forward to earlier in the Fall. And this is where I really like this kind of promotion. There has been a lot of speculation about when the red hot booking cycle will slow down after this summer’s bonanza. Chances are, things are slowing down for Southwest, but with this promo, it can see just how much demand is out there. It can pull bookings forward without putting a fare sale in the market.
If the demand is strong enough, that’s great. Southwest can go forward, comfortable with its pricing as is, free to pursue a life of religious fulfillment. If the demand isn’t strong enough, well, that gives Southwest the opportunity to lower fares, open cheaper fare buckets, or launch a sale to help its fall flights.
In the end, what did it have to do? Southwest basically allowed the business traveler to take a companion along for the ride during the weakest winter months. There isn’t much leisure travel in January and February for most, unless your team happens to make it to the Super Bowl. Maybe it adds a few new travelers to the mix with no extra revenue, but it again won’t likely get as much usage as people think it will. The benefit from this promotion is very likely much greater than the cost.
I fell for the third group and booked a cheap roundtrip same day turn to visit a town I have not been to. No, I do not have any plans to actually use that companion pass.
“If the demand is strong enough, that’s great. Southwest can go forward, comfortable with its pricing as is, free to pursue a life of religious fulfillment.”
You killed me with that one. I’ll only fly WN if captain Over & Roger Merdoch are helming that flight. And please do not serve any fish on that flight.
Good thing about flying Southwest, you never have to worry about ending up with fish!
It’s an entirely different type of flying altogether.
(In unison but somewhat confused) It’s an entirely different type of flying.
We’d like you to accept this flower on behalf of the Church of Religious Consciousness.
Excuse me stewardess, I speak jive.
Johnny, what do you make of this?
I can make a hat or a broach or a pterodactyl!
Uh oh, when Cranky sees this, the s**** gonna hit the fan!
ps – Can I do this for hours? Yes I can. Do I have a t shirt featuring Otto the autopilot? Yes I do.
Interesting analysis, Brett. I’ve never had/used a companion pass, but I’d agree with your point that the perceived value of it often exceeds the actual value.
While I don’t track it, I have noticed an increase in promotional emails (thankfully without being overbearing or too too frequent) from Southwest in the past month or so. I just assumed that it was the usual post-Labor Day slow down in demand, with Southwest trying to fill up the planes between then and Thanksgiving.
I literally just booked a trip with them 2 days before they launched this promotion. I know w/ WN you can cancel and rebook in order to get into promotions but I did not.
WN does this kind of stuff and it is great marketing.
They also reaffirmed their guidance for the 3rd quarter which is just a couple weeks away from ending. Business travel is a bit weak – which explains why butts in seats makes sense.
They continue to have a fuel cost advantage due to hedging but the benefit has narrowed a bit. It is harder to maintain a hedge benefit as prices settle at a common point.
nice bright graphic.