Business travel

Southwest Eliminates Flight Credit Expiration Dates

Southwest Airlines has waived the expiration date on all Southwest flight credits, the carrier announced Thursday. The change applies to all flight credits not expired or created on or after July 28, 2022. Previously, flight credits would have expired 12 months from the date of purchase.

“It’s an industry-leading theft credit policy,” Southwest CEO Bob Jordan said in an earnings call Thursday. “And when you combine that with no change fees, no baggage fees, Rapid Rewards points that don’t expire, and transferable flight credits, it’s just a powerful low-cost brand combo that aims to win more customers.

The policy change comes as some credits for Covid-19-related cancellations were set to expire in September. The company expects the resulting drop in breakage revenue in the third quarter to be between $250 million and $300 million.

Flight credits for non-refundable fares will be issued as long as the reservation is canceled more than 10 minutes before scheduled departure. Until the carrier completes updating its technology system to completely remove flight credit expiration dates, customers with valid credits will begin to see a reserved space expiration date of December 31. 2040, according to Southwest.

Q2 performance

Southwest reported second-quarter net income of $760 million on quarterly operating revenue of $6.73 billion, representing year-over-year increases of 2.6% and 13, 9%, respectively. Operating revenue was a quarterly record, according to the company.

The results were a turnaround from the first quarter, when the carrier reported a net loss of $278 million. Second-quarter passenger revenue was $6.12 billion, up 71.4% year-on-year from $3.57 billion.

Fuel costs for the quarter were $3.36 per gallon and are expected to be between $3.25 and $3.35 for the third quarter. Operating revenue forecasts for the next quarter are up around 8 to 12% compared to the same period of 2019.

Managed business revenue showed sequential improvement throughout the second quarter and fell from a 36% decline in March from 2019 levels to a 19% decline in June, said Andrew Watterson, vice president. Executive Chairman and Chief Commercial Officer of Southwest. The average for the quarter was down 24%.

“While business passenger revenue and overall corporate revenue remain below 2019 levels, managed business fares were higher than 2019 throughout the second quarter,” Watterson added.

Based on third quarter bookings to date, managed business revenue for the period is expected to be 17% to 21% lower than third quarter 2019.

The apparent slowdown in the pace of carrier-run business recovery is more due to seasonality – there is generally less business travel in July and August – but “in September after the holidays, we expect a substantial increase in business trips, so [range] refers to an average for the quarter,” Southwest Business Vice President Dave Harvey told BTN. “We believe the months of the quarter will be dramatically different.”

While it’s “too early” to speculate on the fourth quarter, Harvey noted that in addition to a post-Labor Day acceleration, “based on what we’re hearing from our accounts, we expect October to be one of the strongest business travel months of the year,” he said. “A lot of meetings and events are coming back this fall. by any significant wave of Covid-19.”

The company also added flights in the second half of 2022 aimed at the short-haul business market. That includes intra-California, intra-Texas, the Hawaiian Islands, in the Midwest around Chicago, Baltimore — “logical places where we have a strong customer base and network,” Harvey said.

The decision was based on projected business travel demand as well as the desire to have some redundancy built into the schedule if a flight was delayed or cancelled, “so that we don’t leave crew or passengers stranded and that we can end the day,” Harvey noted.

During the second quarter, Southwest introduced its new Wanna Get Away Plus rate. Over the past week, the company has also activated its Mexican destinations in global distribution systems, Harvey said, allowing bookings through the GDS to Cancun, Cabo and Puerto Vallarta.

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