Southwest revamps fares and rewards for loyal customers

DALLAS - Southwest Airlines Co. (NYSE: LUV), a prominent player in the Passenger Airlines industry with annual revenue of $27.6 billion, unveiled a series of new fare options and added perks for its Rapid Rewards Credit Cardmembers and Tier Members, aiming to enhance customer loyalty and travel flexibility. According to InvestingPro analysis, the company appears undervalued based on its Fair Value assessment, suggesting potential upside for investors. The announcement, made today, introduces fare products such as Choice Extra, Choice Preferred, and Choice, which are set to be available for booking in the third quarter of 2025.

The airline is also rebranding its existing fare classes, with Wanna Get Away fare becoming the Basic fare starting May 28. The new fare structures will coincide with the introduction of assigned and premium seating options, a significant shift from Southwest’s traditional open seating policy. This strategic move comes as the company maintains profitability with a gross profit margin of 22.2%.

In addition to the fare changes, Southwest is expanding benefits for its Rapid Rewards Credit Cardmembers. Starting May 28, Cardmembers will enjoy privileges like seat selection, priority boarding, and a complimentary first checked bag for themselves and up to eight additional passengers on the same reservation.

Tier Members, including A-List and A-List Preferred, will also receive enhanced benefits. These include preferred seating, earlier boarding, and additional inflight perks, aligning with the company’s strategy to provide a more tailored travel experience.

The updated fare products and expanded member benefits are part of Southwest’s broader commitment to meeting the evolving needs of its customers. The airline emphasizes that these changes will offer a wider range of travel experiences for passengers to choose from.

For complete details on the new fare options, Tier Member benefits, and Credit Card offerings, customers can visit the Southwest website. The information provided in this article is based on a press release statement from Southwest Airlines Co. For deeper insights into Southwest Airlines’ financial health and growth prospects, including 12 additional exclusive ProTips, visit InvestingPro, where you’ll find comprehensive analysis and the detailed Pro Research Report available for over 1,400 US stocks.

In other recent news, Southwest Airlines reported its first-quarter 2025 earnings, surpassing analyst expectations. The company posted an earnings per share (EPS) of -$0.13, beating the forecast of -$0.17, with revenue slightly exceeding projections at $6.43 billion. This performance marks a quarterly record in operating revenue for the airline. Despite these positive results, Citi analysts have revised their outlook on Southwest Airlines, lowering the stock price target from $23.00 to $22.00 while maintaining a Sell rating. The analysts cited competitive disadvantages facing discount airlines like Southwest compared to their network counterparts. These network airlines benefit from international routes and robust loyalty programs. The market consensus still places Southwest’s projected 2025 earnings P/E ratio at a higher level than competitors such as Delta, United, and American Airlines. Southwest is also dealing with potential customer attrition risks as it shifts away from policies like open seating and no checked bag fees. These developments highlight the challenges and strategic changes Southwest is navigating in the current market environment.

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