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Airline Travel Insurance vs. Independent Travel Insurance: Which Is Right for You?

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Table of Contents

Airline travel insurance

Independent travel insurance, which one is right for you.

You’ve planned your travel, found a flight, and can’t wait to book the trip on the airline’s website. But right before you hit the payment button, you have one seemingly simple question to answer: Do you want to add travel insurance?

It’s a booking option that has stumped many a traveler. You may think you need it, but what does that airline insurance even cover? And would it be better to purchase separate travel insurance from an independent company instead? Here, we’ll help you break down that decision and figure out which one is right for you.

For starters, every airline’s travel protection coverage is different. Some airlines, like Southwest, don’t offer any sort of trip protection for purchase with regular flights, but they do have an insurance option for Southwest Vacations.

United, on the other hand, offers full travel insurance through a partnership with AIG, while British Airways offers protection with Allianz. So be aware that while you may purchase insurance through the airline, your policy is likely underwritten by a third-party insurer.

Airlines offer a wide variety of travel insurance policies with varying benefits, so ensure you read the fine print to understand your specific coverage. Here are some examples:

Trip cancellation or interruption, meaning you’ll get a refund of whatever you have paid (up to a certain amount) if you have to cancel or postpone your trip due to a covered reason.

Reimbursement for lost or delayed baggage.

Emergency medical coverage and/or assistance while traveling.

And coverage isn’t the only thing that can vary; so does price. One airline might sell a policy for less than $15, while others may be more than five times that amount. This is another instance in which it’s critical to compare the details of what you’re actually getting. Here are two example policies we found for sale via United and Alaska:

A few cons to consider

One potential downside of purchasing travel insurance through your airline is that you only have the option of that airline’s partner provider — which may not be your first choice, or may not offer the coverage you want or need.

United, for example, offers protection through AIG, which covers 100% of your trip cost if you have to cancel travel plans. British Airways, on the other hand, offers a plan through Allianz that only covers up to $1,000 for trip cancellation and protection (often less than the cost of a single international flight).

When booking travel protection or insurance through an airline, you usually won’t have the option to fully customize your plan. For example, if you’ll be participating in activities that aren’t approved by some plans (like bouldering, ballooning or even some volunteer work), you may not be able to upgrade to a plan that covers riskier activities.

However, if you’re not expecting to need any special coverage (though some would argue that you never expect to need it), clicking that box on the checkout page while booking your flight is often an easy and inexpensive option. Just make sure to read the fine print so you know exactly what’s covered and what’s not to avoid disappointment if you ever have to make a claim.

» Learn more: What to do if you get sick while traveling overseas

Independent travel insurance, on the other hand, gives you the ability to shop around and choose a plan that’s right for you.

Using a comparison portal like SquareMouth (a NerdWallet partner) or an independent insurance agent will ensure you get coverage tailored to your trip and will allow you to select plans based on price or features.

For example, if packing important or valuable materials in your checked luggage, you may want a plan that has a higher baggage loss reimbursement. If traveling to a country where there’s a higher risk of contracting malaria or another disease, you may want insurance that offers more overseas medical coverage or medical evacuation. And hand-selecting the exact coverage you want or need is something you can only do if you shop around outside any coverage your airline offers.

» Learn more: How to find the best travel insurance

Which option is right for you comes down to what type of coverage you need and how complex your travel plans are. If you’re taking a quick domestic trip to visit friends and family in a familiar destination and don’t plan to participate in any risky activities, airline-provided travel insurance may be enough protection for you.

On the other hand, if you’re planning the trip of a lifetime with multiple destinations, opportunities for volunteer work, participation in what some companies consider dangerous activities or travel to regions with limited medical care and higher chances of getting sick, it may be wise to consider independent insurance.

Remember that if your trip involves multiple airlines, car rental companies, accommodations and activities, it may be easier to deal with one independent insurance company that will cover your whole trip.

» Learn more: The majority of Americans plan to travel in 2022

Also, you may already have a credit card that comes with some travel protections if you use the card to purchase your trip. Check the fine print to see what protections your card might offer.

Whatever you choose, travel safe.

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2024 , including those best for:

Flexibility, point transfers and a large bonus: Chase Sapphire Preferred® Card

No annual fee: Bank of America® Travel Rewards credit card

Flat-rate travel rewards: Capital One Venture Rewards Credit Card

Bonus travel rewards and high-end perks: Chase Sapphire Reserve®

Luxury perks: The Platinum Card® from American Express

Business travelers: Ink Business Preferred® Credit Card

on Chase's website

1x-10x Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Travel℠ immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases.

60,000 Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $900 toward travel when you redeem through Chase Travel℠.

1x-5x 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases.

60,000 Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Travel℠.

1x-2x Earn 2X points on Southwest® purchases. Earn 2X points on local transit and commuting, including rideshare. Earn 2X points on internet, cable, and phone services, and select streaming. Earn 1X points on all other purchases.

50,000 Earn 50,000 bonus points after spending $1,000 on purchases in the first 3 months from account opening.

Southwest Vacations ® Travel Protection

• If you change or cancel your Southwest vacation prior to departure, all supplier penalties, fees for hotels, rental cars and/or activities will be waived for the first revision instance.
• Any additional fees incurred from changes made to your vacation after the first revision are not waived.
• Please contact Southwest Vacations' Customer Care at (800) 243-8372 to change or cancel your reservation. All changes and cancellations must be received and confirmed by Southwest Vacations' Customer Care prior to departure.
• Trip Interruption Protection: Reimburses (up to the total trip cost) unused hotel arrangements plus additional costs to change or purchase a new airline ticket if you can't travel due to circumstances such as illness or injury to you, a family member, or traveling companion, jury duty, subpoena, or a traffic accident on the way to the airport.
• Missed Connection: Provides a reimbursement for unused arrangements and additional transportation should you miss your tour departure due to a delay of at least 3 hours to 12 hours of all regularly scheduled flights due to a covered reason, such as adverse weather or Quarantine (imposed by a physician or government authority).
• Trip Delay: Reimburses additional Expenses incurred when you are delayed 6 hours or more due to a defined Hazard, for instance, inclement weather, common carrier delays, etc.
• Emergency Evacuation: Under certain circumstances detailed in the Plan, the Plan can pay for the transportation expenses Incurred to evacuate You to the nearest qualified hospital and/or to return you home.
• Medical Expense Reimbursement: Reimburses medical costs should you incur hospital charges or other medical bills as a result of an illness or injury during your vacation.
• Baggage/Personal Property Reimbursement: Reimburses you for baggage or items lost, stolen, or damaged during your vacation.
• Baggage Delay Reimbursement: Reimburses for the purchase of necessary personal items if your bags are delayed by the airline for 8 hours or longer. The plan covers you for the purchase of necessary items in the event your luggage is delayed by an air common carrier for more than 8 hours en route to your vacation.
• Accidental death and dismemberment coverage in the event of loss of life or limb while flying.
• Worldwide Emergency Assistance Services
• Provided by Generali Global Assistance.

Travel Agency

Southwest Airlines Travel Protection & Coverage – [2024 Update]

Last Updated on March 27, 2024 by Rick Spiegel

While traveling on the flight it is a wiser decision to purchase travel protection as passengers are sometimes stuck in critical situations. In that scenario, travel insurance benefits them in many ways. Many airlines offer insurance for single-flight segments as well as multiple-flight segments and Southwest Airlines is one of them which you can find on their official website under Southwest Travel Protection . However, It would be useless to pay for protection on domestic travel on Southwest Airlines. 

You should purchase the insurance when you are planning for a vacation. However Southwest Airlines does not offer travel protection for isolated flights, you can only purchase it for vacation plans.    

Table of Contents

What is Southwest Travel Protection?

When you are traveling with Southwest Airlines, buying insurance can help you save your money and protect you in critical situations. When you decide to purchase Southwest travel protection, you must know about certain rules and restrictions that Southwest follows. 

• The Southwest Travel Protection plan is valid for Caribbean, Mexico, and US destinations only. 
• Besides this, the Southwest travel insurance coverage is not transferrable so you keep that in mind when you are ready to purchase.
• Once you complete your payment, your travel insurance will activated. 
• Passengers can cancel their reservation and get a full refund if they have made their booking directly through Southwest Airlines.
• However, flight segments are non-refundable, and SW Airlines will provide travel credits instead of money. 
• The travel credits will be valid for one year from the date of purchase. 
• Southwest allows one free amendment in the Southwest vacation travel protection. After that, it will waive the fee for hotels, rental cars, and activities.
• Southwest travel protection includes hurricane guarantee which makes its insurance plan more attractive. Because many airlines do not conclude this under their insurance plan.  

What Type of Travel Insurance is Included in the Southwest?

Once you get to know that Southwest Airlines offers travel insurance to its passengers, you must have the knowledge about what type of protection Southwest insurance includes to get the proper benefit of it. Take a look at the following information regarding trip protections.  

• Medical travel insurance 
• Delayed and lost baggage
• Accident protection  
• Travel arrangements 

Medical Travel Insurance 

Southwest Airlines takes care of their passengers in any situation of medical emergencies. According to the Southwest Insurance Plan, the airlines will pay for expulsion due to any medical emergency. Airlines take the responsibility of taking the passenger to the nearest hospital and will pay the transportation fee from their end. Due to any illnesses or injuries during the vacation, Southwest will reimburse the hospital fees and medical bills. 

Delayed and Lost Baggage Protection

In case the flyer faces the situation of baggage being damaged, stolen, or lost during the vacation, then Southwest assures to provide compensation to the flyers. This comes under the Southwest travel insurance lost baggage policy. Along with that, if your bag is delayed more than eight hours during your trip, Southwest will reimburse the passenger for purchasing some important items.    

Accident Protection

According to Southwest Travel Protection, if the passenger loses their life or limb while traveling on the Southwest Airlines, due to any devastating condition, then the airline will provide compensation to the flyer or his/her family.  

Travel Arrangement

If the traveler is unable to travel then Southwest Airlines provides reimbursement under its travel insurance plan. In some particular situations, you can receive complete reimbursements from the airline such as illness or injury situation, Severe health issues of a family member, Subpoena, or Jury duty. These are the conditions passengers can ask for compensation. Apart from this, airlines also repay unused hotel bookings. The airlines will also bear the extra charges to book a new flight or change the flight if the traveler is unable to commute.

Along with that, southwest also provides compensation if the passenger misses the connected flight due to certain reasons such as: 

• 3 to 12 hours of delay of the flight
• Bad weather conditions
• Government restrictions

Delayed Conditions 

When the flight is delayed and this disturbs the flyer’s plans then this is also the airline’s fault and Southwest takes the guard for it. But here are some terms and conditions under the Southwest Travel protection plan. If your flight is delayed more than 6 hours due to the covered reasons in the protection plan, then Southwest will compensate for the additional expenses. The additional expenses can be accommodation, meals, and personal items.

How to Purchase Southwest Travel Insurance?  

After reading all about Southwest travel insurance , the most crucial thing to know is how you can purchase trip protection. What will be the step-by-step process to buy travel protection from Southwest Airlines? If you are also stuck on this question, don’t worry. Follow the steps and go ahead to purchase the insurance. You can simply purchase it online just from your home.

• Go to the Southwest Vacation .
• Fill out the trip details such as origin, destination, number of passengers, and date.
• Now, choose the hotel, flights, cab, etc.
• After that check out the “Add Extras” option, and there you will see event tickets and a travel protection plan.
• The price of the Southwest Protection plan will be displayed on the screen according to the number of passengers and route. 
• In the process, click on the “Add to Cart” button.
• The next step is to click on the “Proceed” option at the bottom.
• The airline will show the breakout of the trip. 
• Click on the “Continue” button.
• Then, add the traveler information, Rapid Reward Account number, and contact details. 
• Move to the payment page and pay the fees. 
• Once you complete the payment, you will receive the booking details at the registered email address. 
• Your booking details will include trip protection.

So this is the online method of Southwest Airlines that you can utilize to buy travel insurance. By following this step, you can easily purchase Southwest Travel Protection.     

Is Southwest Travel Protection Worth It? 

Purchasing trip insurance before your trip can help you to save your money and enjoy many privileges. You are ready to claim compensation in any inconvenient situation during your trip. According to Southwest Travel Protection, passengers are entitled to get their money back when they face interruptions in travel, flight delays, medical emergencies, and baggage delays. Besides this, it also provides a guaranteed refund for vacation interruption due to hurricanes. Under Southwest Trip insurance, the passengers can enjoy one extra benefit of making changes in their itinerary one time completely free. 

So there are multiple reasons why you should purchase travel protection and how they are beneficial. But you must know that Southwest Travel Protection is available for destinations in the USA, Caribbean, and Mexico. Thus check first on which you are planning to travel.        

Frequently Asked Questions(FAQs)

What does trip insurance on a flight cover.

The Southwest travel protection plan includes medical coverage, compensation for baggage loss and delay conditions, accident protection, and more. It also provides compensation in many situations that are covered under its insurance plan.

Does Southwest card offer travel protection?

Yes, if you have a Southwest card, you can enjoy multiple services. This card provides comprehensive travel insurance which covers rental car collision damage waivers, no foreign transaction fees, among other cardholder benefits.

In which countries Southwest travel insurance is valid?

When you are purchasing the Southwest travel insurance, make sure to check the countries where this is valid only such as the Caribbean, Mexico, and US destinations. This protection plan works only in these countries. 

Is Southwest travel insurance transferable?

No, the Southwest travel insurance coverage is not transferrable. You can not shift your insurance to another person. So, read the policy carefully before you purchase.  

Can I cancel my reservation and get a refund from Southwest Airlines?

Under Southwest travel insurance, passengers can get a full refund if they cancel their reservation. They just need to remember that they make the booking directly through Southwest Airlines.      

How many times passengers can make amendments to the travel insurance?

Passengers can make the one free amendment in the Southwest vacation travel protection. After that, it will waive the fee for hotels, rental cars, and activities. 

Does Southwest Airlines travel protection include hurricane conditions?

Yes, if you have purchased Southwest travel insurance then you will get the reimbursement in the condition of the hurricane. However, many airlines do not cover the calamity conditions because this is so common in the American region. 

will I get the reimbursement if my bag is delayed? 

Southwest will reimburse the passenger for purchasing some important items if your bag is delayed more than eight hours during the trip. Southwest understands the situation of the passengers.

Does Southwest provide compensation for the damaged bag condition?

Under delayed and damaged bag protection, southwest provides compensation if the passenger faces the situation of baggage being damaged, stolen, or lost during the vacation   

Does Southwest pay the compensation if I miss the connected flight?

If you miss the connected flight due to a 3 to 12-hour delay in your flight, this is completely the airline’s responsibility. So, Southwest Airlines provides compensation for their fault.

Does Southwest travel insurance cover accidental protection?

Yes, if the passenger loses their life or limb during their journey with the Southwest due to any devastating condition then the airline will pay the compensation to its flyer or their family. The travel insurance covers this part.   

Can I claim for compensation in a medical emergency?

If you have purchased trip insurance, then you do not need to worry about any medical condition. The airline will provide you with a reimbursement, pay the passenger transportation fee, and take the passenger to the nearest hospital.

Is travel insurance worthy?

When you are traveling with the airlines, there comes up multiple situations that passenger faces which is not actually their fault. So they deserve to get their money back. Travel insurance helps in claiming the money back.  

Why Southwest travel protection is good?

Southwest Travel Protection covers a large number of facilities for their passengers. It includes medical coverage, travel protection, lost and damaged baggage coverage, and hurricane conditions also which not every airline covers.

How long do you have to cancel a Southwest vacation package?

To prevent forfeiture of your payments due to “No Show,” any modifications and cancellations must be reported to Southwest Vacations no later than ten minutes before the planned flight departure time. 

How do I file a complaint with Southwest Vacations?

If you are struggling with any condition and confused about how to get the solution, you can easily contact the Southwest Airlines customer care center at 1-800-243-8372 and talk to their representative. 

What are Southwest’s cancellation rules?

According to the Southwest cancellation policy, if you cancel your reservation within 24 hours of the booking, you will be entitled to a refund. You can receive your money back either as money or in the form of credits.   

Can I claim for that medical condition that I have not mentioned in the Southwest insurance?

Airlines cover only those medical conditions that are pre-existing in the Southwest Airlines trip protection policy. If you have not mentioned that in the policy, airlines do not take responsibility for the refund.  

How much does it cost to cancel Southwest?

There is no fee for the cancellation of the ticket on Southwest Airlines if you are canceling it due to the reasons covered under the trip insurance policy such as medical emergency, calamity, etc.   

Does Southwest give refunds?

Yes, with valid reasons, you can claim the refund at Southwest Airlines. You can take the money back as the travel funds or get it back as the original payments.

Rick Spiegel

I'm Rick Spiegel, a dedicated traveler and writer with a passion for all things related to airline travel. My love for exploring new destinations and my commitment to helping fellow travelers navigate the skies have led me to create a space where you can find all the information you need to contact airlines and resolve air travel issues seamlessly. With years of experience in the aviation industry, I've made it my mission to provide you with expertly crafted airline travel guides, ensuring that your journeys are as smooth as possible.

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Find the best credit card for you

Caught in southwest airlines' holiday meltdown credit card insurance benefits could come to your rescue, a credit card with strong travel protection can save you a bundle when your flight is canceled..

If you're stranded in the middle of the Southwest Airlines crisis, your wallet may be feeling the impact of your upended travel plans. Luckily, it may also contain a possible solution.

For more than a week, Southwest has suffered through a historic meltdown that's wrecked both its reputation and the travel plans of passengers. Mass cancellations and delays have sent hundreds of thousands of people scrambling to rebook flights and accommodations. To add insult to injury, many have also been separated from their luggage.

The airline might reimburse passengers some of the costs they’ve incurred as a result of disrupted travel plans. But if you’ve booked your Southwest flight with a credit card that offers travel insurance , you may have better chances of getting your money back. Here’s what Southwest may agree to cover — and how your credit card might help if the airline falls short of your expectations.

Our best selections in your inbox. Shopping recommendations that help upgrade your life, delivered weekly. Sign up here .

How to get reimbursed by Southwest Airlines

Before you reach out to your credit card issuer for help, make sure you get in touch with Southwest first. Federal law requires the airline to offer you a refund on a flight that they've canceled, so you should be able to get your money back for your ticket.

“Southwest is refunding canceled flights, but travelers may have been hit with other costs,” says Bobbi Rebell, CFP and author of “Launching Financial Grownups.” The airline says it “will honor reasonable requests for reimbursement for meals, hotel, and alternate transportation.” But there's no definition of what’s considered "reasonable" or any timeframe for when travelers may expect to hear back about their requests. 

"In other words, there are no guarantees," says Rebell.

Any Southwest passenger affected by a flight cancellation or significant delay between Dec. 24, 2022, and Jan. 2, 2023 can submit receipts for additional expenses via email on the airline's website .

If you don't have any luck with Southwest, check which credit card you’ve used to pay for the flight and extra expenses. Depending on the travel protection benefits it offers, you could still get back some money.

How a credit card with travel insurance can help

Travel insurance can keep you covered when your travel plans go awry for reasons beyond your control and you incur additional expenses as a result. Some premium travel credit cards offer this type of coverage as a benefit.

A credit card can come with several types of travel protections , but the following three can be especially helpful in the Southwest crisis (or a similar one):

• Trip delay insurance , which can reimburse you for meals and lodging when your trip is delayed.
• Trip cancellation and interruption insurance , which can cover eligible travel expenses if your trip is canceled or cut short.
• Baggage insurance , which can cover damage or loss of your luggage or select items, such as toiletries or clothes, or if your luggage delayed.

The cards that offer all three of these travel protections include the Chase Sapphire Preferred® Card , the Chase Sapphire Reserve® and the Bank of America® Premium Rewards® credit card. So, if Southwest fails to reimburse you for lost luggage or for lodging expenses while you’re stranded, one of these cards can help.

Chase Sapphire Preferred® Card

Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, and $50 annual Chase Travel Hotel Credit, plus more.

Welcome bonus

Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Travel℠.

Regular APR

21.49% - 28.49% variable on purchases and balance transfers

Balance transfer fee

Either $5 or 5% of the amount of each transfer, whichever is greater

Foreign transaction fee

Credit needed.

Excellent/Good

Terms apply.

Read our Chase Sapphire Preferred® Card review .

Chase Sapphire Reserve®

Earn 5X total points on flights and 10X total points on hotels and car rentals when you purchase travel through Chase Travel℠ immediately after the first $300 is spent on travel purchases annually. Earn 3X points on other travel and dining & 1 point per $1 spent on all other purchases plus, 10X points on Lyft rides through March 2025

Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $900 toward travel when you redeem through Chase Travel℠.

22.49% - 29.49% variable

5%, minimum $5

Read our Chase Sapphire Reserve® review.

Bank of America® Premium Rewards® credit card

Earn unlimited 2 points for every $1 spent on travel and dining purchases and unlimited 1.5 points per $1 spent on all other purchases.

Receive 60,000 online bonus points — a $600 value — after you make at least $4,000 in purchases in the first 90 days of account opening.

20.24% - 27.24% variable APR

4% of the amount of each transaction

Information about the Bank of America® Premium Rewards® credit card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

How to use credit card travel insurance

To use travel protections available with your credit card, make sure you purchase your airplane tickets with that card. Otherwise, the coverage won’t apply.

Next, check your credit card’s benefits guide. This will have all the information on the type and amounts of insurance available to you, as well as how long you have to submit a claim.

“There are big differences in coverage depending on which card you have, so it's essential to read the fine print ahead of time and understand what is and is not covered,” Rebell says.

For example, in the case of trip cancellation or interruption, the Chase Sapphire Preferred or Reserve cards can reimburse you for up to $10,000 per person and $20,000 per trip for eligible pre-paid, non-refundable travel expenses, including transportation, tours and lodging. The Bank of America Premium Rewards, on the other hand, can only cover up to $2,500 for non-refundable passenger fares.

You can also call your credit card issuer and talk about your specific situation to ensure that coverage will apply.

Once you know what coverage you're entitled to, get your documentation in order. Gather up all the receipts for purchases you want to receive reimbursement for. You also should have records showing any loss that has occurred and communication with the travel provider proving it has failed to reimburse you.

With your documents ready, you can file a claim. This usually involves getting in touch with your issuer's benefits administrator and filling out a claim form you can submit with all the evidence you’ve gathered. Sometimes, you can also begin the process online. Check your benefits guide for specific instructions and contact information.

After you submit the claim, all that’s left to do is to wait for the issuer’s decision. If all goes well and the bank approves your claim, they’ll be in touch to explain how you’ll receive the funds.

Bottom line

The holiday travel season has been especially messy this year, with the Southwest crisis still affecting countless passengers. If a canceled flight or delayed luggage has put a strain on your budget, and you’re worried the airline won’t help, your travel credit card might offer a solution.

If your credit card doesn’t offer travel insurance but you travel often, it might make sense to look into cards with this benefit for your future trips.

“We’ve all learned that when it comes to an airline meltdown such as this one, there's only so much we can control,” Rebell says. “While some travel credit cards with insurance can be pricey, the peace of mind... can be priceless.”

Information about the Bank of America® Premium Rewards® has been collected independently by Select and has not been reviewed or provided by the issuer prior to publication.

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11 Benefits of the Southwest Rapid Rewards Plus Credit Card [2023]

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1. earn southwest rapid rewards points, 2. complimentary earlybird check-in, 3. anniversary bonus points, 4. southwest companion pass boost, 5. southwest plus card referral bonus, 6. save on inflight purchases, 7. access to chase offers, 8. baggage delay insurance, 9. lost luggage reimbursement, 10. purchase protection, 11. extended warranty protection, final thoughts.

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f you fly on Southwest Airlines often, you may be wondering if a Southwest co-branded credit card makes sense to have in your wallet. There are 5 Southwest cards to choose from, and in this post, we’ll focus on the benefits of the entry-level option: the Southwest Rapid Rewards ® Plus Credit Card .

We’ll look through the perks of the Southwest Plus card in detail to help you decide if it’s right for you, or if a different Southwest credit card may be a better fit.

Southwest Rapid Rewards ® Plus Credit Card

This card makes it easy to earn unlimited points and qualify for the Southwest Companion Pass.

If you spend a lot of time in the air, it’s important to get a great deal on your plane tickets.

Southwest Airlines can help you get those deals.

One way to save is by using the Southwest Rapid Rewards ® Plus Credit Card . This card helps you earn points for all your spending, and earning more reward points is always a good thing for a busy traveler!

• 2x points per $1 on Southwest purchases
• 2x points per $1 on local transit and commuting, including rideshares
• 2x points per $1 on internet, cable, phone services, and select streaming
• 3,000 anniversary points each year on your card renewal
• 2 EarlyBird Check-In certificates per year
• 25% back on inflight purchases
• $69 annual fee
• Does not earn transferable rewards
• Earn 50,000 bonus points after spending $1,000 on purchases in the first 3 months from account opening.
• 3,000 anniversary points each year.
• Earn 2X points on Southwest ® purchases.
• Earn 2X points on local transit and commuting, including rideshare.
• Earn 2X points on internet, cable, and phone services; select streaming.
• 2 EarlyBird Check-In ® each year.
• Earn 1 point for every $1 spent on all other purchases.
• Member FDIC

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11 Southwest Plus Card Benefits

The entry-level Southwest Plus card has a low annual fee, which means its list of benefits isn’t too long. However, this card could still make sense for some Southwest flyers who are looking for a low-cost way to collect lots of points or for those who don’t want to pay a large annual fee.

One of the biggest benefits of the Southwest Plus card is the ability to earn lots of Rapid Rewards points through your everyday spending. Here’s a look at how you earn points when making purchases on the card:

• 2x points on Southwest Airlines purchases made directly with the airline
• 2x points on Rapid Rewards hotel and car rental partners
• 2x points on local transit and commuting, including rideshares
• 2x points on internet, cable, and phone services
• 2x points on select streaming services
• 1x points on all other purchases

You’ll also earn a welcome bonus when signing up for the Southwest Plus card and meeting the minimum spending requirement. The bonus changes from time to time, but you can typically expect to earn anywhere from 30,000 to 50,000 Rapid Rewards points .

The Southwest Plus card has the lowest earning rate for Southwest purchases of any of the Southwest credit cards. If you spend a lot on Southwest flights, you might be better off with a different Southwest card that earns 3x or 4x points on flights with the airline.

There’s another way to earn points with the Southwest Plus card, but it’s not recommended in most circumstances. The Southwest Plus card earns points on balance transfers . You’ll earn 1 Rapid Rewards point per dollar on up to $10,000 in balance transfers in the first 90 days after account opening. While that sounds nice on the surface, the card does have a balance transfer fee which can wipe out the value of any points you may earn, so it’s probably best to avoid this as a way to earn more Rapid Rewards points.

If you’re planning on doing a balance transfer you’ll most likely be better off using a card that offers a 0% introductory APR instead of the Southwest Plus card.

The Southwest Airlines boarding process is unique because instead of getting a seat assignment before your flight, you get a boarding position that’s based on the time you check in for your flight. Once you’re on the aircraft you’ll be able to choose whatever seat is open, meaning those who have a better boarding position will have more seating options.

For those who don’t want to remember to check in exactly 24 hours before their flight, there’s EarlyBird Check-In . EarlyBird Check-In costs between $15 to $25 per person per flight and automatically checks you in, which gets you a better boarding position and allows you to choose a more desirable seat.

If you have a Southwest Plus card, you’ll get 2 complimentary EarlyBird Check-In credits each year . This can be a valuable benefit for anyone that flies Southwest Airlines even just once per year.

Southwest Plus cardholders receive 3,000 bonus points after their card account anniversary. These points will be automatically applied to your Southwest account each year after you pay your annual fee.

We value Southwest Rapid Rewards points at ~1.3 cents each, so this bonus is worth ~ $ 39.

The Southwest Companion Pass is one of the best ways to save lots of money on travel. It allows you to bring a companion on every Southwest flight you take for only the cost of taxes and fees ($5.60 one way for a domestic flight) for up to 2 years.

Without the Southwest Plus card, you’d need to earn 135,000 qualifying points in a calendar year to get a Companion Pass. However, Southwest Rapid Rewards credit cardholders get a 10,000-point boost each year which essentially reduces the required number of points to earn a Companion Pass from 135,000 to 125,000. These points are only good for Companion Pass qualification and aren’t redeemable for travel.

Points earned from spending and welcome bonuses on Southwest cards count towards Companion Pass qualification.

If you have a Southwest Rapid Rewards credit card, you may have the ability to refer friends and family to apply for any Southwest credit card. When they are approved, you’ll earn bonus Rapid Rewards points. One of the best parts of this perk is that points earned from referral bonuses also count toward Companion Pass qualification.

You’ll save 25% on Southwest inflight purchases , such as drinks and Wi-Fi, by paying with the Southwest Plus card. The discount, which is also extended to any authorized users, comes as a statement credit that should post to your account on the same day as the purchase.

Access to Chase Offers comes with any Chase card, including the Southwest Plus card. These are card-linked deals that can save you money on your everyday purchases. Each offer needs to be added to the card prior to making a purchase.

These offers are targeted and include a wide variety of vendors, including discounts on Southwest Airlines purchases.

Frequent travelers will most likely be affected by a baggage delay at some point. The Southwest Plus card offers reimbursement for basic items like toiletries and clothing when your bags are delayed more than 6 hours by a common carrier (airline, bus, train, or cruise ship). This benefit covers you for a maximum of $100 per day for up to 3 days.

The Southwest Plus card includes lost luggage reimbursement coverage for both the cardholder and immediate family members. If a common carrier (airline, bus, train, or cruise ship) damages or loses checked or carry-on luggage, you’re eligible for up to $3,000 per passenger .

The Southwest Plus card offers purchase protection coverage of up to $500 per claim ($50,000 maximum per account) when a new purchase is damaged or stolen within 120 days.

The extended warranty benefit on the Southwest Plus card adds an additional year to a U.S. manufacturer’s warranty when the original warranty is 3 years or less.

The Southwest Plus card is the entry-level option in the Southwest co-branded card family. While it offers a low annual fee, its list of benefits isn’t as robust as some of the other Southwest cards. However, it could still be a good option for someone looking for a low-cost way to earn lots of Southwest Rapid Rewards points and also enjoy a few basic Southwest-related perks like EarlyBird Check-In and the ability to save 25% on inflight purchases.

Travelers who are interested in more comprehensive airline perks or elite status would be better off with a different Southwest card.

Frequently Asked Questions

How many anniversary bonus points does the southwest plus card earn.

Each year after your Southwest Plus card’s renewal, you’ll earn 3,000 anniversary bonus points, which are worth about $39.

What is the credit limit on the Southwest Plus card?

The credit limit on the Southwest Plus card will vary based on your creditworthiness and other factors, including how much credit you already have with Chase.

Does the Southwest Plus card have a foreign transaction fee?

Yes, the Southwest Plus card charges a foreign transaction fee so you’ll want to use a card that doesn’t have foreign transaction fees when traveling internationally.

What bank holds the Southwest credit cards?

All 5 Southwest credit cards are issued by Chase.

Does Southwest have a card without an annual fee?

No, every Southwest card charges an annual fee. The Southwest card with the lowest annual fee is the Southwest Plus card.

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About Katie Seemann

Katie has been in the points and miles game since 2015 and started her own blog in 2016. She’s been freelance writing since then and her work has been featured in publications like Travel + Leisure, Forbes Advisor, and Fortune Recommends.

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Key takeaways

• The Southwest Rapid Rewards® Plus Credit Card offers a good earning structure and solid benefits for travelers who enjoy flying with Southwest Airlines.
• Earning the card's generous welcome bonus is relatively easy, and it more than covers the cost of the card's low annual fee.
• This card also comes with various travel benefits, an annual points bonus and more.

The Southwest Rapid Rewards® Plus Credit Card is a good card for consumers who prefer traveling with Southwest and want to start earning rewards toward travel expenses. You’ll be able to earn Southwest Rapid Rewards points which can be redeemed for airfare, hotel stays, gift cards and more.

The card also has many other solid benefits for frequent Southwest flyers, such as a low annual fee and a high welcome bonus. Even though it may not have as many benefits as some premier travel cards , it’s still a valuable card for occasional travelers. Keep reading to learn more about the rewards rates and other benefits offered with this card.

Southwest Rapid Rewards® Plus Credit Card top benefits

Welcome bonus.

One of the biggest benefits of the Southwest Rapid Rewards Plus card is that it offers a chance to earn a very nice welcome bonus. Currently, you can earn 50,000 bonus points after spending $1,000 on purchases in the first 3 months from account opening.. This is an easy spending threshold to meet and an easy way to earn bonus points toward future traveling.

Earns elevated rewards on spending

With the Southwest Rapid Rewards Plus card, you’ll earn Southwest Rapid Rewards points on every purchase you make. These points can be redeemed for flights, gift cards, merchandise and more.

Although the card earns a standard 1X points per dollar spent on most purchases, you can earn additional points for purchases made in specific categories. For example, you’ll earn 2X Rapid Rewards points on every dollar spent through Southwest Airlines. Hotel stays and car rentals booked through Southwest or their affiliated partners also earn 2X points per dollar. And you can earn 2X points on local transit and commuting options (including rideshares) and cable, phone, internet and select streaming services.

Southwest Rapid Rewards® Plus Credit Card annual benefits

Low annual fee.

This card offers the lowest annual fee of any Southwest card at $69 per year. Plus, the annual fee can easily be offset by other benefits of the card, such as the anniversary bonus.

Anniversary bonus

Each year on your account anniversary, you’ll earn 3,000 bonus points. According to Bankrate’s latest point valuations , Southwest Rapid Rewards points are worth 1.5 cents apiece. That means the Southwest Rapid Rewards Plus anniversary bonus is worth about $45, which nearly covers the $69 annual fee all on its own.

Companion Pass qualifying points boost

The Southwest Companion Pass is a valuable benefit that allows one person to fly with you for free anytime you fly on Southwest (taxes and fees apply). To get the Companion Pass, you must earn 135,000 qualifying points in a calendar year. The Southwest Rapid Rewards Plus helps you earn this bonus faster by offering a boost of 10,000 Companion Pass qualifying points each calendar year.

Southwest Rapid Rewards® Plus Credit Card travel benefits

Lost luggage reimbursement, baggage delay insurance, 2 earlybird check-in upgrades, 25% back on in-flight purchases, auto rental collision damage waiver, southwest rapid rewards® plus credit card additional benefits, purchase and extended warranty protection.

The Southwest Rapid Rewards Plus credit card offers great purchase protection on items bought with the card. If an item you purchased with the card becomes damaged or stolen within 120 days after purchase, you’re eligible for a reimbursement of up to $500 per event and up to $50,000 per account. Additionally, the card’s extended warranty protection provides an extra year of warranty coverage on items purchased with your card that come with an eligible U.S. manufacturer’s warranty of three years or less.

Valuable rewards redemptions

Points earned with the Southwest Rapid Rewards Plus credit card can be redeemed for flights on Southwest Airlines to anywhere they fly. Points can also be redeemed for international travel though Southwest’s airline partners, as well as hotel and resort partners like Best Western and Marriott Bonvoy. You can also redeem points for gift cards, event tickets, merchandise, travel experiences and more.

How to maximize your Southwest Rapid Rewards® Plus Credit Card benefits

To maximize the Southwest Rapid Rewards Plus card’s benefits, be sure to earn the welcome bonus. By meeting the $1,000 spending requirement in the first three months, you’ll earn 50,000 points — which is worth up to $750 when based on Bankrate’s 1.5 cent per point valuation. That means the welcome bonus alone covers the $69 annual fee more than 10 times, which is pretty impressive.

Using the Southwest Rapid Rewards Shopping portal can also help you earn additional rewards and take advantage of special discounts. Some merchants may offer up to 5X points or more for every dollar spent through the portal.

Consider taking advantage of the Southwest Rapid Rewards Dining program and linking your Southwest Rapid Rewards Plus card to further maximize your rewards earning potential. Although you don’t need a Southwest card to participate, you can earn up to 3X points per dollar at participating restaurants. Additional bonus points are also available when you sign up for the program.

While it may take some work, the Southwest Rapid Rewards Plus card can also give you a leg up on obtaining the valuable Southwest Companion Pass . With the Rapid Rewards Plus card, you’ll get a 10,000 point boost each calendar year toward earning the 135,000 qualifying points needed to obtain the Companion Pass.

The bottom line

For those who prefer to travel with Southwest, the Southwest Rapid Rewards Plus credit card is one of the best airline credit cards on the market. You’ll earn 2X points per dollar on Southwest purchases, local transit (including rideshare purchases) and more. And you can redeem those points for flights, gift cards, merchandise and other valuable experiences.

The card also offers many other useful benefits for cardholders. The generous welcome bonus and a 3,000-point anniversary bonus help to offset the card’s low annual fee. In addition to several travel and purchase protections, all the points you earn can be used to save money on your next trip.

Top reason to love the Southwest Rapid Rewards Plus Card: Fast track to free travel

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Southwest Rapid Rewards Plus Credit Card review: The improved entry-level Southwest card takes flight

Southwest Airlines flight attendants ratify a contract that will raise pay about 33% over 4 years

D ALLAS (AP) — Flight attendants at Southwest Airlines have ratified a contract that includes pay raises totaling more than 33% over four years, as airline workers continue to benefit from the industry's recovery since the pandemic.

The Transport Workers Union said Wednesday that members of Local 556 approved the contract by a margin of 81% to 19%. The union's board rejected a lower offer last summer, and flight attendants voted against a second proposal in December.

Southwest has about 20,000 flight attendants. They will get raises of more than 22% on May 1 and annual increases of 3% in each of the following three years.

The union said the contract provides record gains for flight attendants and sets a standard for other flight attendants. Cabin crews at United Airlines and American Airlines, which are represented by other unions, are still negotiating contracts.

The union said the deal gives Southwest crews the shortest on-duty day and highest pay in the industry, compensation during disruptions like the Southwest meltdown in December 2022, and industry-first paid maternity and parental leave. Workers will also split $364 million in ratification bonuses, according to the union.

Dallas-based Southwest, the nation's fourth-biggest airline, said the contract includes changes in scheduling and will help the airline's operation.

Pilot unions at Delta, United, American and Southwest approved contracts last year that raised pay by more than one-third over several years. This week, Delta said its flight attendants and other nonunion workers will get 5% raises .

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You Might Be Entitled to Compensation If Your Bag Is Delayed — What to Know

Here's what to do if your checked luggage is delayed.

What to Do If Your Baggage Is Delayed

Passenger rights for delayed baggage, how to determine compensation for delayed baggage, travel insurance coverage for delayed baggage compensation, how to submit delayed baggage compensation claims, delayed baggage policies of major u.s. airlines.

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There's a reason many seasoned travelers are wary of checking a bag for a flight — there's no guarantee it will show up at your destination on time, or even at all. In 2022, U.S. airlines mishandled approximately three million bags, according to the Bureau of Transportation Statistics . Granted, that's out of 470 million checked bags, which means most are handled properly. But that's no consolation if your bag is one of the delayed ones, and you're stuck on a trip without all your belongings.

What might console you, however, is the knowledge that you're likely entitled to compensation for extensive baggage delays . "The average compensation from an airline for checked luggage that is either lost or damaged is $1,525 to $3,500, under U.S. and Montreal Convention air passenger rights laws," says Tomasz Pawliszyn, CEO at air passenger rights organization AirHelp .

If your bag is delayed (but not permanently lost), here's what you need to know.

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Meet the Expert

• Tomasz Pawliszyn is the CEO at air passenger rights organization AirHelp.

If you're standing at baggage claim and your luggage doesn't appear on the conveyor, the first step you need to take is to report your missing bag to the airline. This must be done at your final destination, not during a layover. Most airlines have a desk in the baggage claim area where you can file a Property Irregularity Report (PIR), which contains both personal information and the details of your missing bag, including its brand and color. You'll also be able to provide the airline with the address at which you're staying, so they can deliver it right to your door once found (for free). If there's no airline desk at baggage claim, contact your airline while you're still at the airport to report the missing bag.

If your checked bag is delayed, an airline must compensate you for any reasonable expenses incurred due to the holdup. For instance, if you checked all your toiletries and need to buy new ones while your bag is missing, an airline should reimburse you for those items. Keep in mind this compensation will only be issued after you file a claim, so you will have to pay out of pocket for any essentials while your luggage is delayed.

These rights are protected by law both domestically and internationally. Domestically, the U.S. Department of Transportation (DOT) requires airlines "to compensate passengers for reasonable, verifiable, and actual incidental expenses that they may incur while their bags are delayed — subject to the maximum liability limits," which is $3,800. Furthermore, "airlines are not allowed to set an arbitrary daily amount for interim expenses."

If you're flying internationally, you're likely protected by an international treaty called the Montreal Convention, where the maximum baggage liability is approximately $1,700. "Airlines are free to pay more than the limit, but are not required to do so," per the DOT . The European Union also has its own limitations: up to approximately €1,300 .

Peter Dazeley/Getty Images

There's only one rule when it comes to the airline-issued compensation for delayed baggage: The expenses must be "reasonable." Toiletries are certainly considered reasonable expenses, though you might not be able to justify high-end products to your airline. Other essential items may include a bathing suit for a beach vacation, a suit for a business meeting, or even gear rentals for a ski trip (assuming you packed your equipment in your checked bag).

But don't consider delayed baggage a chance to go on a shopping spree. While what's considered reasonable isn't specifically defined in the case of delayed baggage compensation, any items for which you're looking to be reimbursed should be easily defendable.

If you have travel insurance — whether a standalone policy or what your credit card covers for purchases — you may be able to receive additional compensation for your delayed baggage beyond what an airline issues. Most policies will require you to file a claim with your airline first, as it's required to compensate you. Read the details of your specific policy to find out the amount covered for delayed baggage, as well as the process of filing a claim for reimbursement.

Each airline (and insurance company) has its own process for administering delayed baggage compensation, but you must always first file a PIR. "Make sure you hold on to the file reference number provided by the airline," advises Pawliszyn. That will be essential for filing your baggage compensation claim.

Once you've submitted your PIR, you can start shopping for essentials. "All passengers should preserve receipts for essential replacements," Pawliszyn adds. You'll need to submit those to your airline for reimbursement, noting your PIR's file reference number, often within 30 days of your flight. Additional documents you might need include your airline ticket receipt, boarding pass, and baggage claim check (the sticker handed to you when you check your bag).

If an airline does not reimburse you for all of your reasonable expenses incurred due to the baggage delay, you may be able to appeal the decision. Be prepared for reimbursement to take some time, even up to a month. For any items that are not reimbursed by the airline, you can file a claim with your travel insurance, depending on your policy.

Twenty47studio/Getty Images

Alaska Airlines

Baggage issues with Alaska Airlines must be reported in person at the destination airport's baggage service office within 24 hours of arrival. You must also submit receipts for travel essentials like toiletries and clothing in person at the office.

American Airlines

Delayed bags must be reported at the airport's baggage service office within four hours of a domestic arrival or before you leave your destination airport on an international trip. You can submit compensation claims online with the following documents:

• Your PIR file number
• Your ticket receipt and baggage claim check
• Original dated and itemized receipts

Delta Air Lines

Delayed bags must be reported at the airport's baggage service center. If your bag is delayed more than 12 hours, you may be able to receive a rebate for your checked baggage fee in the form of an e-credit. Beyond that, Delta suggests $50 per day of the delay for reasonable expenses, though the airline notes this is just a guideline, not a cap or limit. Receipts can be submitted online for reimbursement.

JetBlue allows you to report a delayed bag online instead of in person at a baggage office — you must do so within four hours of landing. Then, you can submit receipts for essential items online, which the airline will reimburse.

Southwest Airlines

For Southwest , you can file a report for a delayed bag at an airport baggage service office, online, via email, or by phone. Receipts can be submitted online for compensation claims.

United Airlines

With United , delayed baggage must be reported within 24 hours of domestic flights and seven days of international trips, either at a baggage service office or online. You can then submit receipts for essential items online for reimbursement.

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25% back on inflight purchases footnote reference *

6,000 anniversary points footnote reference *

• After your Cardmember anniversary

3 points per $1 spent footnote reference *

• opens overlay Southwest purchases, including flight, inflight, and Southwest gift cards

2 points per $1 spent footnote reference *

• opens overlay Rapid Rewards hotel and car rental partners
• Local transit and commuting purchases, including rideshare, passenger trains, buses, taxis, tolls, and parking lots and garages
• Review the complete list of qualifying services opens in new window
• Internet, cable, and phone services, and select streaming

1 point per $1 spent footnote reference *

• All other purchases made with your card

Enter your approximate monthly spend in each category.

on Southwest purchases  

on local transit and commuting, including rideshare

on internet, cable, and phone services, and select streaming

on Rapid Rewards hotel and car rental partners

on all other purchases  

each year after your Cardmember anniversary

6,000 6,000

points per year.

Southwest Airlines flights –Redeem your points for flights to over 90 destinations and enjoy all you love about flying Southwest Airlines. opens overlay Search for flights

Hotel stays and car rentals –Redeem at thousands of hotels and car rental agencies from all over the country through the More Rewards platform.

Rapid Rewards Access Events –Use your points to experience unique events especially curated for Cardmembers.

Gift cards –Choose from some of your favorite retailers and redeem for as few as 3,000 points.

Merchandise –Shop for electronics, golf supplies, luggage, travel accessories, and more.

International flights on 50+ global carriers –Use your Rapid Rewards points for flights.

Earn up to 100K bonus points per year!

You can earn 20,000 bonus points for each friend who gets any Southwest ® Rapid Rewards ® Credit Card when you use the link.

As a Southwest Rapid Rewards Cardmember, you can now keep track of all the points you've earned so far this year with your card. You can also see the benefits and perks that come with your card.

Find your Rewards Dashboard by viewing your Southwest Rapid Rewards Credit Card account on Chase.com:

Illustrative Example Only

• Priority boarding
• Priority check-in and security lane access footnote reference *
• 25% more Rapid Rewards points earned on each flight
• Same-day standby footnote reference *
• Dedicated A-List Members phone line

Companion Pass is the benefit that allows you to choose one person to fly with you, free of airline charges (does not include taxes and fees from $5.60 one-way) every time you purchase or redeem points for a flight. All points earned with your Rapid Rewards Credit Card count toward Companion Pass.

Remember, as an exclusive benefit, Rapid Rewards Credit Cardmembers will receive a boost of 10,000 Companion Pass qualifying points every year.

Your December statement closing date is the cutoff for purchases made with your Rapid Rewards Credit Card to count towards a Companion Pass for that calendar year.

For example, if your December statement closes on December 16, points for purchases posted to your statements made after that date will not count toward qualifying points for the year.

Call 1-800-792-0001 to request an upgrade today.

close overlay × Auto Rental Collision Damage Waiver Decline the rental company’s collision insurance and charge the entire rental cost to your card. Coverage is provided for theft and collision damage for most rental cars in the U.S. and abroad. In the U.S., coverage is secondary to your personal insurance.

close overlay × Roadside Dispatch If you have a roadside emergency, call 1-800-847-2869 anytime to dispatch the help you need - anything from a tow or jumpstart to a tire change, lockout service, winching or gas delivery. Roadside service fees will be provided when you call and will be billed to your card.

close overlay × Purchase Protection Covers your new purchases for 120 days against damage or theft up to $500 per claim and $50,000 per account.

close overlay × Extended Warranty Protection Extends the time period of the U.S. manufacturer’s warranty by an additional year, on eligible warranties of three years or less.

close overlay × Lost Luggage Reimbursement If you or an immediate family member check or carry on luggage that is damaged or lost by the carrier, you're covered up to $3,000 per passenger.

close overlay × Baggage Delay Insurance Reimburses you for essential purchases like toiletries and clothing for baggage delays over six hours by passenger carrier up to $100 a day for three days.

close overlay × Travel and Emergency Assistance Services If you run into a problem away from home, call the Benefit Administrator for legal and medical referrals, or other travel and emergency assistance. (You will be responsible for the cost of any goods or services obtained.)

close overlay × Travel Accident Insurance Visa Signature When you pay for your air, bus, train, or cruise transportation with your card, you are eligible to receive accidental death or dismemberment coverage of up to $500,000. Travel Accident Insurance Visa Platinum When you pay for your air, bus, train, or cruise transportation with your card, you are eligible to receive accidental death or dismemberment coverage of up to $250,000.

• Bags fly free ® footnote reference *
• Unlimited reward seats with no blackout dates or seat restrictions footnote reference *
• No change fees footnote reference *
• Southwest Airlines inflight entertainment footnote reference *

* TERMS AND CONDITIONS

Southwest ® EarlyBird Check-In ® : Each anniversary year you will be reimbursed for the purchase of up to 2 EarlyBird Check-In services made with your Southwest Rapid Rewards ® Premier Credit Card. Each EarlyBird Check-In service means a purchase made for EarlyBird Check-In one-way, per Passenger. Anniversary year means the year beginning with your account open date through the first statement date after your account open date anniversary, and the 12 monthly billing cycles after that each year. If you switch to this product from another Chase credit card, your account open date is the date the switch to the Southwest Rapid Rewards ® Premier Credit Card is completed. EarlyBird Check-In provides automatic check-in before the traditional 24-hour check-in and can be purchased as part of the original flight purchase or added to a flight after purchase. Price of EarlyBird Check-In may vary. Statement credit(s) will post to your account the same day your purchase posts to your account and will appear on your monthly credit card billing statement within 1-2 billing cycles. Account must be open and not in default at the time the statement credit is posted to your account. Statement credits will be issued for the anniversary year in which the transaction posts to your account. For example, if you purchase EarlyBird Check-In and Southwest does not post the transaction until after your current anniversary year ends, the cost of the EarlyBird Check-In services will be allocated towards the following year’s maximum of 2 services. More information can be found at opens overlay Southwest.com/early-bird .

Companion Pass: Companion Pass ® qualifying points are earned from revenue flights booked through Southwest ® , points earned on Rapid Rewards ® Credit Cards, and base points earned from Rapid Rewards partners. The following do not count as Companion Pass qualifying points: purchased points; points transferred between Members; points converted from hotel and car loyalty programs, e-Rewards ® , Valued Opinions, and Diners Club ® ; points earned from Rapid Rewards program enrollment, tier bonus points; flight bonus points; and partner bonus points (with the exception of the Rapid Rewards Credit Cards from Chase). No points nor tier or Companion Pass qualifying points will be awarded for flights taken by the Companion when flying on a Companion Pass reservation. Points earned during a billing cycle on a Southwest Airlines Rapid Rewards Credit Card from Chase are not available for redemption or qualification for Companion Pass status until they are posted on your billing statement and posted to your Rapid Rewards account. Only points posted on your billing statements and posted to your Rapid Rewards account during the same calendar year are available for qualification for Companion Pass status. For example, if you make a purchase after your December billing statement cycle date, the points on those purchases will not count toward Companion Pass status in the year the purchase was made; they will appear on your January billing statement and post to your Rapid Rewards account in January. Companion Pass Qualifying Points Boost: As a Southwest Rapid Rewards Cardmember, you will earn one boost of 10,000 Companion Pass qualifying points each calendar year. The boost will be deposited into your eligible Rapid Rewards account by January 31st each calendar year or up to 30 days after account opening. To receive Companion Pass qualifying points boost your credit card account must be open and not in default at the time of fulfillment. Only one credit card account per Southwest Rapid Rewards Member (Rapid Rewards Member must be the primary Cardmember on that account), is eligible for one boost of 10,000 Companion Pass qualifying points per calendar year. JPMorgan Chase Bank, N.A. is not responsible for the provision of, or failure to provide, the stated benefits and services.

Tier Qualifying Points: Tier qualifying points (TQPs) are earned from revenue flights booked through Southwest Airlines ® or when you, or an authorized user use the Southwest Rapid Rewards ® Premier Credit Card from Chase to make purchases of products and services, minus returns or refunds. (You’ll earn 1,500 for each $5,000 in purchases annually. “Annually” means the year beginning with your account open date through the first December statement date of that same year, and each 12 billing cycles starting after your December statement date through the following December statement date.) TQPs earned during a billing cycle on a Southwest Rapid Rewards ® Premier Credit Card from Chase are not available for qualification for benefits such as A-List and A-List Preferred status until they are posted to your Rapid Rewards ® account. The following will not count toward qualification for A-List or A-List Preferred status: Rapid Rewards program enrollment points; Rapid Rewards reward flights; Rapid Rewards Companion Pass ® travel; Rapid Rewards partner points except for TQPs earned on the Southwest Rapid Rewards ® Premier Credit Card from Chase; Rapid Rewards bonus points, unless specifically designated as such; non-revenue travel, unless specifically designated as eligible; stops at intermediate cities on connecting or through flights; and charter flights. TQPs are not redeemable for travel on Southwest ® or through the “More Rewards” site.

25% back on inflight purchases on Southwest Airlines ® flights: You will receive 25% back on Southwest Airlines inflight purchases made with your Southwest Rapid Rewards ® Premier Credit Card for drinks and WiFi in the form of a credit card account statement credit. Statement credit(s) will post to your credit card account the same day as your purchase(s) and will appear on your monthly credit card billing statement within 1-2 billing cycles. You will also receive 25% back on inflight purchases made by authorized users on your account. To qualify for the 25% back, purchase must be made with your Southwest Rapid Rewards ® Premier Credit Card and your account must be open and not in default at the time of fulfillment.

Earning Points: Rewards Program Agreement: For more information about the Rapid Rewards ® Premier Card rewards program, view the latest opens in a new window Rewards Program Agreement (PDF) . If you are a Chase Online customer, your Rewards Program Agreement is available after logging in to chase.com. You can also see your Rewards Program Agreement that you received in the mail. How you can earn points: You’ll earn points on purchases of products and services, minus returns or refunds, made with a Rapid Rewards ® Credit Card by you or an authorized user of the account. Buying products and services with your card, in most cases, will count as a purchase; however, the following types of transactions won’t count as a purchase and won’t earn points: balance transfers, cash advances and other cash-like transactions, lottery tickets, casino gaming chips, race track wagers or similar betting transactions, any checks that access your account, interest, unauthorized or fraudulent charges, and fees of any kind, including an annual fee, if applicable. 3 points: You’ll earn 3 points for each $1 spent on purchases made directly with Southwest Airlines ® , including flight, inflight, Southwest ® gift card, and Southwest Vacations ® package purchases. 2 points: You’ll earn 2 points for each $1 spent on purchases at participating Rapid Rewards ® hotel and rental car partners. 2 points: You’ll earn 2 points for each $1 spent on purchases in the local transit and commuting rewards category. 2 points: You’ll earn 2 points for each $1 spent on purchases in the following rewards categories: internet, cable, and phone services; select streaming services. 1 point: You’ll earn 1 point for each $1 spent on all other purchases. 1 point on balance transfers: You’ll earn 1 point for each $1 of the first $15,000 of balance transfers made during the first 90 days from your original account open date. 6,000 bonus points each account anniversary year: You’ll receive 6,000 bonus points each account anniversary year. “Account anniversary year” means the year beginning with your account open date through the anniversary of your account open date, and each 12 months after that. 1,500 tier qualifying points: You’ll earn 1,500 tier qualifying points (TQPs) for each $5,000 spent in purchases annually. TQPs can be used to count toward qualification for Rapid Rewards A-List or A-List Preferred status. “Annually” means the year beginning with your account open date through the first December statement date of that same year, and each 12 billing cycles starting after your December statement date through the following December statement date. Information about earning/transferring points to Southwest Airlines ® : Points earned during a billing cycle will be automatically transferred to Southwest Airlines after the end of each billing cycle. Losing points: You’ll immediately lose all points that haven’t been transferred to Southwest Airlines if your card account status changes, or your card account is closed for program misuse, fraudulent activities, failure to pay, bankruptcy, or other reasons described in the terms of the Rewards Program Agreement. Rewards Categories: Merchants who accept Visa/Mastercard credit cards are assigned a merchant code, which is determined by the merchant or its processor in accordance with Visa/Mastercard procedures based on the kinds of products and services they primarily sell. We group similar merchant codes into categories for purposes of making rewards offers to you. Please note: We make every effort to include all relevant merchant codes in our rewards categories. However, even though a merchant or some of the items that it sells may appear to fit within a rewards category, the merchant may not have a merchant code in that category. When this occurs, purchases with that merchant won’t qualify for rewards offers on purchases in that category. Purchases submitted by you, an authorized user, or the merchant through third-party payment accounts, mobile or wireless card readers, online or mobile digital wallets, or similar technology will not qualify in a rewards category if the technology is not set up to process the purchase in that rewards category. For more information about Chase rewards categories, see opens in a new window chase.com/RewardsCategoryFAQs .

Priority Check In And Security Lane Access: For a complete list of available Fly By ® locations, visit opens overlay Southwest.com/flyby .

Same-Day Standby: If there’s an open seat on a different flight that departs on the same calendar day as your original flight and it’s between the same cities, A-List and A-List Preferred Members can get a seat on the new flight free of airline charges. If there isn’t an open seat on this different flight, you can ask a Southwest Gate Agent to add you to the same-day standby list for a flight between the same city pairs that departs on the same calendar day prior to your originally scheduled flight, and you will receive a message if you are cleared on the flight. For both the same-day change and same-day standby benefits, you must change your flight or request to be added to the same-day standby list at least 10 minutes prior to the scheduled departure of your original flight or the no-show policy will apply. Based on the flight status contact preference selected during booking, the message regarding your standby status will be an email or text message with a link to access the boarding pass via the Southwest app, mobile web, or you can visit a Southwest Gate Agent to print off the boarding pass. If there are any government taxes and fees associated with these itinerary changes, you will be required to pay those. Your original boarding position is not guaranteed. Important: These benefits are available only by seeing a Southwest Gate Agent or calling 1-800-I-FLY-SWA ® . If you change your flight through any other channel or to a flight that does not meet the requirements outlined above, you will be responsible for the difference in price. If an A-List or A-List Preferred Member is traveling on a multiple-Passenger reservation, same-day standby and same-day change will not be provided for non-A-List or non-A-List Preferred Members in the same reservation. For A-List and A-List Preferred Members who have also qualified for a Companion Pass ® , A-List, and A-List Preferred benefits are not available to the Companion unless the Companion is also an A-List or A-List Preferred Member.

Travel And Purchase Protection: These benefits are available when you use your card. Restrictions, limitations and exclusions apply. Most benefits are underwritten by unaffiliated insurance companies who are solely responsible for the administration and claims. There are specific time limits and documentation requirements. Please refer to your Guide to Benefits for a full explanation of coverages, or call the number on the back of your card for assistance.

Bags Fly Free: First and second checked bags. Weight and size limits apply.

No Blackout Dates And Unlimited Reward Seats: No blackout dates and unlimited reward seats apply to flights booked with points.

No Change Fees: Fare difference may apply.

Free live TV: Available only on WiFi-enabled aircraft. Limited-time offer. Where available. To view movies and select on-demand TV content, download the Southwest app from the Google Play Store or Apple App Store before your flight.

SOUTHWEST RAPID REWARDS ® PROGRAM INFORMATION The Southwest Rapid Rewards Credit Card is brought to you by Southwest Airlines ® and Chase. Southwest Airlines is responsible for the redemption of Rapid Rewards points toward benefits and services. The number of points needed for a particular Southwest flight is set by Southwest ® and will vary depending on destination, time, day of travel, demand, fare type, point redemption rate, and other factors, and are subject to change at any time until the booking is confirmed. Rapid Rewards points can only be transferred to the primary Cardmember’s Rapid Rewards account. All Rapid Rewards rules and regulations apply and can be found at opens overlay Southwest.com/rrterms . Southwest reserves the right to amend, suspend, or change the program and/or program rules at any time without notice. Rapid Rewards Members do not acquire property rights in accrued points.

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business Airlines

Southwest Airlines flight attendants land new contract with immediate 22% raise

Flight attendants at american airlines and united airlines are still bargaining for a new contract..

By Alexandra Skores

1:44 PM on Apr 24, 2024 CDT

Southwest Airlines flight attendants voted in favor of a new contract on Wednesday, the first contract among unionized flight attendants at major airlines.

Transport Workers Union Local 556, which represents Southwest’s nearly 20,000 flight attendants, announced Wednesday that the contract had passed. Voting was open April 10-24 and closed at noon Wednesday. The union and Southwest have been in negotiations since 2018, and this is the third tentative agreement on the table.

Some 92.7% of eligible union members voted, with 81% casting a ballot to approve the deal and 19% against.

The contract is a four-year deal beginning May 1 and expiring May 1, 2028, and it includes an immediate 22% snap-up raise and 3% raises in 2025, 2026 and 2027. It also includes retroactive pay to make up for not having any raises since the last contract went up for negotiation.

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“This was about our members raising their voices and choosing to lift not only themselves, but also an entire industry. With their tenacity and perseverance, the flight attendants of Southwest Airlines have shown that we can do great things when we are committed to standing in solidarity,” said Lyn Montgomery, president and lead negotiator of TWU Local 556, in a statement. “It’s an honor and privilege to serve this membership in such a time as this.”

Currently, a flight attendant at the “topped-out” level makes $63.30 per hour at an 80-hour “trip for pay” month, the formula Southwest uses to calculate wages, according to TWU Local 556. That equates to $5,064 a month in base pay, not including extras like premiums or holiday pay. TWU Local 556 says that means a flight attendant would be making $60,768 a year in base pay at the highest level.

In the new contract, that same level of flight attendant would make $77.43 an hour, or $6,194 a month. That would bring the annual salary to $74,332, before extra incentives or bonuses.

There’s also a ratification bonus. All flight attendants are eligible for the bonus based on individualized 401(k) eligible earnings, and it is paid in two installments. According to the union, it’s worth “no less than $364 million.”

The new contract introduces new maternity leave benefits, including six weeks paid for natural birth and eight weeks paid for cesarean section births.

“Our flight attendants embody Southwest’s legendary hospitality as they take care of our customers and keep them safe throughout their travels,” said Adam Carlisle, vice president of labor relations at Southwest. “This agreement rewards our flight attendants and includes provisions that strengthen Southwest’s operation.”

Related: Southwest Airlines flight attendants reach new deal after rejecting contract in December

Flight attendants at major U.S. airlines have been without a contract for years now, including those at Fort Worth-based American Airlines , who are represented by the Association of Professional Flight Attendants, while all major U.S. airlines’ pilots have received new deals. United Airlines flight attendants, represented by the Association of Flight Attendants-CWA, picketed earlier this month and used Southwest’s agreement as a talking point during their picket.

It’s the third agreement on the table. In June, the union’s executive board rejected a contract proposal from the company . Then, a few months later in October, it had another tentative agreement on the table, but ultimately voted to reject the contract in December .

This year, flight attendants at Southwest voted in favor of authorizing a strike following the Southwest Airlines Pilots Association achieving a new deal. Shortly after, their deal was announced in March .

It’s the last workgroup to ratify a contract with Southwest. The airline has ratified 11 labor deals since Oct. 2022.

Alexandra Skores , Aviation Reporter . Alexandra Skores is the aviation writer for The Dallas Morning News, covering airlines, air travel and the aerospace industry. She's a graduate of the University of Iowa. Alexandra has previously worked at the Oregonian in Portland, Oregon and The Gazette in Cedar Rapids, Iowa.

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Nearly half a century ago, Rollin King and Herb Kelleher began Southwest with a simple idea:

“ If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.”

They were right! Southwest’s unique take on making travel easy and fun has built a loyal tribe of travelers. Low fares, open seating, no change fees and fun in flight make travelers come back again and again.

Like several other airlines, Southwest does not sell travel insurance. The airlines that do wait until the last moment of check-out then spring their flight insurance offer on a customer who is already in a buying frame of mind. This can make it much easier to sell but many travelers have buyer’s remorse once they realize that the insurance doesn’t cover what they need.

While we typically don’t recommend buying the airline’s travel insurance, travel insurance itself can be critical. Domestic travelers can benefit from having robust travel health insurance. For international travel, comprehensive medical and evacuation insurance is essential. While you may not be able to buy Southwest Airlines Travel Insurance, you should certainly consider having trip insurance to cover your trip.

Let’s look at our options for travel insurance on the open marketplace.

Our Sample Trip – Phoenix to Honolulu

For our sample trip, our two travelers booked a flight from Phoenxi, AZ to Honolulu, HI for November 11, 2022 – December 30, 2022. In choosing our fare, Southwest provides several options. While Business Select and Anytime offer fullly refundable tickets, Wanna Get Away and Wanna Get Away Plus will only offer us flight credit in lieu of cash if we cancel.

For our departure, the prices for each fare would be:

Return flights back to Phoenix are a bit more expensive due to coming back on a Friday:

Be very careful when making your booking selections with Southwest. It is quite easy to turn a low-cost flight into something that looks much more like a business class trip. But, without the lie-flat seat!

Having considered the options, we chose Wanna Get Away Plus for both legs as we won’t need a refundable ticket for reasons we’ll discuss later on when we choose travel insurance. The total cost for our trip is $1,624.00.

Now that we have our flight chosen, it’s time to search for travel insurance.

Do I Really Need Travel Insurance if I Fly Southwest?

A question that comes up a lot when flying with Southwest is: ‘ Do I really need insurance if I’m flying domestically? ’

Although flight cancellation protection is one very good reason for taking flight insurance, there are many benefits to consider.

Lost or Delayed Bags

The contents of your luggage are probably important to you. Travel insurance can offer some protection if the bag is lost or delayed.

Medical Insurance Coverage

Travel Medical Insurance is usually a primary concern for travelers who worry about getting sick or injured far from home. While most of us have some form of health insurance at home, it often doesn’t cover us, or doesn’t cover much, when we travel. This is certainly the case when we travel internationally.

If you are flying internationally with Southwest, then definitely call your health insurer to see if they will cover you internationally. If not, travel insurance can provide extensive health benefits during a vacation. With foreign private hospitals charging $3k - $4k per day, it makes sense to carry adequate travel health insurance.

Even domestic travel can present a challenge to a traveler who does not take travel health insurance. Your healthcare may not cover you out-of-state, or out of network. If it does, it is likely that there will be much higher co-pays. A quick call to your health insurer will allow you to understand if you have coverage when you travel and how much coverage they will provide.

TravelDefenders recommends having a minimum of $10,000 of medical coverage when traveling domestically, and a minimum of $100,000 when traveling internationally.

Travel Medical Evacuation Coverage

Travel Medical Evacuation coverage gets you to the nearest suitable medical facility when you are severely ill or injured. This type of coverage is embedded into every comprehensive travel insurance policy. While this is relevant for domestic travel, we think it essential when traveling internationally. A medical evacuation by private jet from the Caribbean back to the USA could cost $100k. There is no way that an individual traveler wishes to be responsible for such an expense.

TravelDefenders recommends having a minimum of $150,000 of medical evacuation coverage when traveling domestically, and a minimum of $250,000 when traveling internationally.

As mentioned previously, Southwest doesn’t sell travel insurance, which is fine by us. Let’s look at our options in the marketplace through a quote from TravelDefenders .

TravelDefenders Travel Insurance Options

TravelDefenders  is a travel insurance marketplace. We get binding insurance quotes, anonymously, from our travel insurance carriers. We work with some of the largest travel insurance carriers in the USA, licensed in all 50 states, and D.C., with A.M Best ratings of at least an 'A'.

Let’s look at the options for our travelers to find the best flight insurance for their trip.

We input our travel details into the TravelDefenders quote system and received 25 policy options to choose from. The least expensive plan for our two travelers going from Phoenix to Honolulu is the IMG Travel Lite for $194.78.

The policy provides $100,000 of medical coverage and $500,000 of medical evacuation coverage – far above the recommended minimums for domestic travel. Baggage coverage, trip delay, trip cancellation and trip interruption are also included. If we must cancel our trip for a reason listed in the policy such as for illness or injury, we can get a full refund of our trip costs, which can include hotels, tours, or other non-refundable costs we’ve included.

However, the one thing this policy does NOT cover is a pre-existing medical condition. If we don’t have any, this policy would work well for us, but if we do, we need to look at another policy.

The least expensive policy that will cover pre-existing medical conditions as long as we purchased the policy within the allotted timeframe is the IMG Travel SE for $293.90.

The policy provides $250,000 of medical coverage and $500,000 of medical evacuation coverage as well as baggage coverage, trip delay, trip cancellation and trip interruption. Pre-existing medical conditions will be covered if the policy is purchased within 20 days of our initial trip payment or deposit date.

As with the Travel Lite policy, if we must cancel our trip for a reason listed in the policy such as for illness or injury, we can get a full refund of our trip costs, which can include hotels, tours, or other non-refundable costs we’ve included. Southwest will only refund us the airfare or provide a credit for future travel (depending on the fare chosen) but will not refund any other prepaid, non-refundable costs such as hotels or tours. We could end up losing a lot of money without travel insurance covering these additional costs.

But what if we want the ability to cancel for any reason whatsoever and not just for a reason listed in the policy? What options do we have?

Cancel for Any Reason – Airline Ticket Hack

While Southwest provides refundable tickets if we choose ‘ Business Select ’ or ‘ Anytime ’ fares, the ‘ Wanna Get Away’ and ‘ Wanna Get Away Plus ’ fares are non-refundable and only give us a credit for future travel. In all fares, they will only cover the airfare and no other non-refundable costs we’ve incurred.

Remember, with the IMG Travel Lite or Travel SE policy, our travelers get a full refund of their trip costs including the cost from the non-refundable ticket if they are sick, injured, laid off, or have their work vacation cancelled. That covers most reasons why someone would need to cancel a trip but not all of them.

Still, there is one level of cancellation benefit greater: Cancel for Any Reason (CFAR) Travel Insurance . A CFAR policy allows us to cancel for any reason we want. If the reason is a listed reason in the policy, we receive a 100% refund of our trip costs. If not, we would receive either a 50% refund or a 75% refund, depending on the policy we purchased.

The least expensive policy that contains Cancel For Any Reason benefits is the Seven Corners Round Trip Basic (CFAR 75%) for $376.30.

This policy provides $100,000 of medical coverage, $250,000 of medical evacuation coverage, trip cancellation, trip interruption and cancel for any reason benefits if we purchase the policy within 20 days of our initial trip payment or deposit. The policy provides a 75% refund if we cancel for any reason NOT listed as a standard cancellation reason.

Though more expensive than the other two options we looked at, it can be worthwhile if we need maximum cancellation flexibility AND want to get cash back for our trip costs and not just a credit for future travel. Also, our other non-refundable trip costs besides airfare would be covered.

Southwest Airlines for International Travel

Southwest is not just a domestic airline anymore. Indeed, its route map is growing each year with international options.

Here are some of the international destination Southwest flies to:

• Cabo San Lucas/Los Cabos
• Grand Cayman
• Liberia, Costa Rica
• Mexico City
• Montego Bay
• Nassau, Bahamas
• Puerto Vallarta
• San Jose, Costa Rica
• Turks and Caicos

When traveling to one of these locations, you may find that your personal health insurance will be severely limited or not cover you at all. For this reason, a policy with strong medical and evacuation benefits is critical.

We want to have at least $100k of Travel Health Insurance coverage unless we have benefits in another policy. Health care costs of $3k-4k per day in a private hospital are common and can quickly add up.

Our recommendation for Medical Evacuation Insurance coverage is for no less than $250k if the vacation is close to the United States. This should suffice for most of the locations that Southwest flies to. Once we move to longer range travel, then higher cover levels are recommended. $500k of evacuation coverage is recommended for those travelers going to Africa, Asia or Australia.

Can I Buy Travel Insurance for Someone Else?

We know that may of our customers are parents and grandparents. They worry about youngsters in their family and how they can protect them. We all get particularly worried when we think of low-cost airfare to Mexico and the Caribbean. We know that this is exactly the sort of vacation that our kids or grandkids would love to go on. And, most likely, they won’t even think of buying travel insurance. Can we buy travel insurance for them?

Absolutely! In fact, most of the time travel insurance is bought by someone else. A parent will often buy coverage for the whole family. Each person listed on the policy will get their own policy and accompanying benefits. We provide answers to common questions about who buys the insurance in this  article .

With trip costs rising along with healthcare costs, it simply makes good sense to buy travel insurance before you leave home.

Does TravelDefenders Charge More?

You will not find the same flight insurance plan available at a lower price. This price certainty can be guaranteed due to anti-discriminatory insurance laws here in the USA. . This is powerful consumer protection and means you are seeing the best possible rates for any plan we provide.

TravelDefenders  offers you a multitude of different plans from some of the most respected travel insurance carriers in the country. You will only need a few minutes to check value for money, coverage, and insurance carrier ratings.

We believe that Travel Medical Insurance is always valuable, no matter how far you’re traveling from home. With international travel, Travel Medical Insurance is a must.

So, enjoy your next trip with Southwest. They offer great value for money and allow you to shop for the best travel insurance policy to fit your needs through marketplaces like TravelDefenders .

So next time you’re planning a trip with Southwest, don’t forget to include trip insurance.

Safe travels!

This article has been written for review purposes only and does not suggest sponsorship or endorsement of AARDY by the trademark owner.

Recent AARDY Travel Insurance Customer Reviews

Carolyn Watson

Agent Sylvia is very knowledgeable and friendly!!!

Agent Sylvia was so detailed and informative about my need. She has the patience of Joel. Sylvia answered every question and explained the reason why it is imperative take the required documents with me. Thanks, Sylvia for your assistance and your knowledge!!!!!!! Carolyn Watson

customer - S. Nash

Janet was professional, patient, and courteous.

Felicia was very helpful

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Southwest airlines (luv) q1 2024 earnings call transcript.

Southwest Airlines (NYSE: LUV) Q1 2024 Earnings Call Apr 25, 2024 , 12:30 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Hello, everyone, and welcome to the Southwest Airlines first-quarter 2024 conference call. I'm Gary, and I'll be moderating today's call, which is being recorded. A replay will be available on southwest.com in the Investor Relations section. [Operator instructions] Now Mrs.

Julia Landrum, vice president of investor relations, will begin the discussion. Please go ahead, Julia.

Julia Landrum -- Vice President, Investor Relations

Thank you so much. Hello, everyone, and welcome to Southwest Airlines first-quarter 2024 conference call. In just a moment, we will share our prepared remarks, after which we will be happy to take your questions. On the call with me today, we have our president and CEO, Bob Jordan; executive vice president and CFO, Tammy Romo; executive vice president and chief commercial officer, Ryan Green; and chief operating officer, Andrew Watterson.

A quick reminder that we will make forward-looking statements, which are based on current expectations of future performance. and our actual results could differ materially from expectations. As we will reference our non-GAAP results, which exclude special items that are called out and reconciled to GAAP results in our press release. So please refer to the disclosures in our press release from this morning and visit our Investor Relations website for more information.

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And now I'm pleased to turn the call over to you, Bob.

Bob Jordan -- President and Chief Executive Officer

Thank you, Julia. Hello, everyone, and welcome to our first-quarter call. Well, let me state right up front that I am disappointed with our first-quarter performance. There are a lot of factors that I'll go into, and there's a lot to cover, including the latest Boeing challenges.

More importantly, there are significant efforts and progress underway as we cannot, and we won't be satisfied until we are delivering the kind of returns you expect from Southwest Airlines. So before I go any further, I just want to sincerely thank our people for their extraordinary efforts as we work quickly to drive improvement. Turning to our performance. We achieved records for first-quarter operating revenues and passengers continuing our streak of eight straight quarters of record top line performance.

We saw a nice acceleration in managed business revenues up 25% nominally year over year. We also continued our streak of solid operational performance. For a while now, we have been consistently running a great completion factor averaging right around 99%, and we continue to improve in nearly all operational and customer metrics. I'm also proud of the progress we made on our open labor agreements.

It's been a long road, and I want to recognize everyone involved for continuing to work through to the finish line to reward our amazing employees for their contributions. Ryan will go into our revenue performance in more detail in a moment. And while our revenue trends were solid in the first quarter and are expected to be solid year again in the second quarter, we need to increase revenue production to offset cost inflation. The biggest opportunity to improve performance and profitability and urgency is continued focus on network optimization and capacity.

We opened 18 new cities during the pandemic and worked hard in 2023 to restore our network and fly our full fleet on the heels of the demand surge in 2022, while that boosted aircraft utilization, it added significant capacity. And when combined with 2023 business travel coming in below projections has resulted in a significant number of new markets under development and a material number of markets that are not performing at the level required in this higher-cost environment. Network adjustments planned last fall are in place as of the March schedule, and they are proving to be largely on track. Those optimization efforts were primarily aimed to adjust for changing demand trends, including lower capacity on Tuesday and Wednesday, a reduction in short-haul business markets and a material reduction in flights during shoulder periods of the day.

The changes are beneficial and they contributed to us exiting the first quarter with healthy margins for the month of March, more as needed and we are continuing efforts to optimize the network and reduce the number of markets in development that aren't performing to more historic levels. Along those lines, we have made the difficult decision to eliminate service in four cities. Syracuse, New York, Houston, Intercontinental Cozumel, and Bellingham, Washington. That is never an easy decision.

We form bonds with the airports and the communities that we serve. These are wonderful communities, and we are very grateful for their support over the past several years. In addition, we are also restructuring several other stations. Most notably, we are reducing flights in Atlanta and Chicago O'Hare.

While it's never our desire to exit a city or shrink service to a market, we are committed to our financial performance goals, and network and capacity actions will continue as a lever to improve overall financial performance. In addition to network optimization, we have a number of other efforts underway to increase revenue productivity. First, tuning our new revenue management system by better anticipating and optimizing demand and fares along the booking curve and unlocking additional capabilities that will further boost the contribution from the system. Second, focusing on increasing passenger volume including adding new attributes to our value proposition.

We are working to ensure our current and future customers understand our terrific value proposition. That includes a significant new brand campaign which started last week, highlighting our signature customer-friendly policies. Separately, we are considering more transformational options and follow-on initiatives. That includes work previously underway to study customer preference around seating and our cabin.

It's been several years since we last studied this in-depth and customer preferences and expectations change over time. We are also studying the operational and financial benefits of any potential change. We remain committed to our industry best customer-friendly policies but we are also committed to understanding and meeting customer expectations. We have transformed before adding things like WiFi, larger bins, and in-seat power, and we will continue to adapt as needed.

It is too early to share the specifics of what we are exploring, but I want to be transparent and let you know that work is well underway. Of course, the biggest change we have experienced is the news from Boeing on deliveries. The Boeing issues are a significant impact, and we are taking quick action to replan based on expected 2024 and 2025 delivery delays. As I've said before, while it's impactful, I support Boeing taking the time to do the work to understand and fix the issues, a stronger Boeing company for the long term is good for Southwest Airlines.

I visit Boeing in late March, and while there is much work to do, I am encouraged by the comprehensive approach that their leadership is taking. I will be back at Boeing this summer when they complete their plan, and I will be visiting Spirit Aerosystems as well. I won't downplay the challenges from the Boeing issues. They are a big deal and contribute to changing capacity set.

They're redoing schedules and forecasting now in accurate staffing levels. All of that is costly. It pulls people away from their regular work and it creates a significant financial drag. That said, it won't deter from our work to improve our results.

We will continue to control what we can control and work our plan as they take the time to become a better Boeing company. Boeing issues aside, we already had aggressive plans in place to further optimize the network to improve profitability, moderate capex and capacity to improve free cash flow and ROIC and drive staffing and operational actions to improve efficiency. All of that work is now being accelerated. As we continue our focus on capital efficiency, free cash flow generation and aggressively restoring our returns, we will continue to moderate both capacity and capex until we do so.

Managing our capex is obviously key to improving free cash flow, which, along with ROIC, we are laser-focused on. Our bias will remain to retire aircraft as planned and any capacity growth that we have in the near term will come entirely from gauge and initiatives to drive aircraft utilization, including tightening turn time through process innovation and automation, and introducing a modest level of red-eye flying. Both of those initiatives boost aircraft utilization and create capacity without aircraft capex. The initiative to reduce turn time is going well and is a first step.

12 stations will see a five-minute reduction in turn time in the November 2024 schedule with further reductions in early 2025. We will share details on the full plan, which includes these and other planned strategic initiatives at our Investor Day, now planned for September 26th when I look forward to welcoming everyone here to Dallas. On our cost control efforts, note that we already had plans in place to end 2024 with head count flat to down through efficiency efforts like deploying automation, and Gen AI solutions for greater productivity and some customer support functions and driving organizational efficiency by combining like functions. Further capacity reductions in 2024 and 2025 create additional head count and efficiency challenges, and we are moving quickly to address those through a combination of voluntary programs.

We have essentially frozen and stopped all hiring except for a limited number of critical positions and now expect to end 2024 with head count down approximately 2,000 as compared to the end of 2023 and headcount will be down again in 2025 through continued efficiency efforts. We are already seeing the benefits of time off without pay program that in fact, the participation in these programs generated higher-than-expected savings in March which was one of the factors that contributed to us beating our first-quarter CASM-X guidance. Last quarter, we laid out a plan that included providing a line of sight to cover our cost of capital in 2024. We are admittedly materially off that plan.

Much of this comes from external factors, including headwinds from increased market prices for fuel and impacts attributable to the most recent delays in Boeing deliveries but we aren't accepting that as our fate and are taking swift action against what we can control. So there's a lot going on right now, and we have a good grip and plan around areas of the business where we can improve. As a recap, we are continued to be guided by our goals to drive ROIC performance by making additional network adjustments to specifically address underperforming markets and adjusting capacity, enhancing revenue performance in the intermediate term through marketing and revenue management efforts, offsetting cost pressures with efficiency initiatives and programs to reduce headcount and lower discretionary spending. Curbing our capacity plans and managing down capex and investing in initiatives that create capacity without capital investment.

And finally, by creating a new set of strategic initiatives to share with you at our Investor Day this September. We will not tolerate underperformance of any kind, and everyone is committed to doing what it takes. I am truly blessed to lead the company with such passionate and dedicated employees, and I am confident that we can and will adjust as needed as we have in the past and work to hit our financial targets, which are not negotiable. So before I close, I just want to say thank you again to our employees for all that they do every single day.

And with that, I will turn it over to Tammy for a more in-depth review of our financial performance and outlook.

Tammy Romo -- Executive Vice President, Chief Financial Officer

Thank you, Bob, and hello, everyone. As Bob just covered, this year is not shaping up as we had initially planned. We have never and will never accept underperformance. There are a lot of things that contributed to our current position, the impact of continued delivery delays from Boeing, significant market-driven inflationary pressure from new labor contracts, volatile fuel prices, and dynamic customer travel patterns.

Those are all very real reasons, but we will not use them as excuses. Instead, our focus is to control what we can control, to take aggressive actions to adapt as required and to produce financial returns period. Bob mentioned the warrior spirit of our employees. It's a very real thing, and it will be the key to our turnaround.

So before I dive in, I want to thank our incredible employees for their resilience, their perseverance and their dedication as we gear up to tackle the challenge we have before us. Ryan and Andrew will speak to our revenue and operations performance in detail. So I'll start with our cost performance before moving to fleet and balance sheet. Overall, our unit cost, excluding special items, increased modestly, less than 1% year over year in first quarter.

Our first-quarter average fuel price of $2.92 per gallon came in a bit below our guidance range. Market prices have been volatile. And based on the April 18th market, we increased our full-year fuel price guidance by roughly $0.15 to a range of $2.70 to $2.80 per gallon and we're anticipating our second-quarter fuel price to fall within that range as well. We are currently 55% hedged here in the second quarter and 58% hedged for the full year.

We continue to prudently add to our fuel hedge position for 2026, now 26% hedged, and are currently 47% hedged in 2025. Our treasury team continues to do a great job managing our program as we see cost-effective opportunities to expand our hedging portfolio with the continued goal to get to roughly 50% hedging protection in each calendar year. The purpose of our hedge is to provide protection from spikes when we need it most. Over the past two years, we have benefited significantly from our hedge portfolio, generating net settlement gains of $872 million and $145 million in 2022 and 2023, respectively.

For 2024, we are currently expecting only a very modest loss, but as Brent gets above $90 a barrel, our position would begin to materially kick in that obviously is helpful insurance to have in this volatile environment. Moving to nonfuel cost. Our first-quarter unit cost, excluding special items, were up 5% year over year in first quarter. Of course, that was primarily driven by pressure from new labor agreement and an increase in planned maintenance associated with the -800s coming off their engine honeymoon.

This was a point ahead of our previous expectations, primarily from favorable airport settlements, but also from some early benefits from our cost control initiatives like voluntary time off programs. I am very thankful to all the employees who are pitching in to help reduce costs. It's always been part of our culture and the contributions that our people are making across the company are a sign that our culture is alive and well. Throughout first quarter, we were reacting and adjusting to continuous information from Boeing on further aircraft delivery delays, causing some additional movement within our CASM-X guidance expectations as we quickly worked to revise our 2024 plans.

While Boeing's challenges continue to significantly impact us, I am immensely proud of the way our team continues to handle such a dynamic situation, running multiple forecasting scenarios for critical decision support, including support in adjusting capacity and reoptimizing the network. Looking to second-quarter and full-year 2024, we continue to expect similar cost pressures throughout the year, driven primarily by elevated labor costs and maintenance expenses. We currently estimate our second quarter CASM-X to increase in the range of 6.5% to 7.5% year over year and our full-year CASM-X to increase in the range of 7% to 8% year over year, elevated from our previous full-year CASM-X guidance due to lower capacity plans in the second half of the year. The estimated sequential change in nominal CASM-X from first to second quarter is largely in line with historical norms when adjusted for capacity levels.

roughly 5 points of our full-year CASM-X guidance is attributable to elevated salaries, wages and benefits expense and roughly 1 point is due to elevated maintenance and materials expense. While we continue to expect pressure from maintenance costs this year, we have reworked our maintenance plans given our new delivery expectations and we now expect lower full-year 2024 maintenance expense compared with our previous expectations. We are also planning more voluntary leave and time off programs to further reduce labor expenses and address current overstaffing. Despite these added pressures, which are a direct result of the Boeing aircraft delivery delays, we are aggressively working to control costs, reduced inflationary pressures, and cut discretionary spending across all cost categories.

I want to reiterate, we are far from satisfied with our current financial performance, and we will work relentlessly until we return to financial prosperity with our North Star being ROIC well exceeding our cost of capital. We will go into a lot more detail on our plans at Investor Day in September of this year. Now turning to our fleet. We have reacted quickly over the quarter to the updated Boeing delivery delays.

We began the quarter with the expectation we received 79 of our 85 contractual deliveries in 2024. That number dropped to an expected 46-8 aircraft at the timing of our March 8-K and has since reduced even further to a conservatively planned 20-8 aircraft deliveries. Thus far, we have received 5-8 aircraft from Boeing during the first quarter and have retired 3-700 aircraft from our fleet. To reduce distractions and impacts to the business and hedge against further potential delivery delays, we will now plan to hold on to an additional 14-700 aircraft that were originally planned to retire this year, bringing our expected 2024 total retirements found to 35 aircraft, including 4-800 lease returns compared with our previous expectation 49 aircraft retirements.

While we remain committed to our fleet modernization, we feel it is prudent to retain some flexibility until we have better certainty around our aircraft deliveries and around the certification of the MAX-7. The updated Boeing delivery expectations has also impacted our capital expenditures and cash flow expectations for the year. As a result of these 20 expected aircraft deliveries, we currently expect our capital spending to be approximately $2.5 billion, well below our previous guidance of $3.5 billion to $4 billion. Keep in mind, our 2024 capex guidance includes an estimate for progress payments based on our current contractual order book and capex estimates will be fluid until we finish working our plans and aligning on updated expectations for actual 2025 deliveries which we plan to share at our Investor Day this fall.

A quick note on our capacity plans. The Boeing delivery delays did not impact our first-quarter capacity finishing up 11% year over year on solid completion factor. Looking ahead, as we rework our capacity plans for the year, we now expect second-quarter capacity to be up in the range of 8% to 9% year over year. The majority of the Boeing capacity cuts will occur over the second half of the year with third-quarter capacity expected to increase in the low single digits and fourth-quarter capacity expected to decrease in the low to mid-single digits, placing our full-year 2024 capacity up approximately 4% all year over year.

Looking beyond 2024, we plan to keep any future growth at or below macroeconomic growth trends until we reach our long-term financial goals to consistently achieve ROIC well above our cost of capital. As a reminder, our aircraft delivery and retirement expectations are subject to Boeing's production capability and we will react as quickly as possible if any further adjustments are needed with the focus on taking care of our customers and aligning with our financial goals. Lastly, I am immensely grateful for our balance sheet strength as we move through another challenging year. We ended the quarter with $10.5 billion in cash and short-term investments with a nearly $1 billion reduction from the prior quarter, driven by the payout of a labor agreement ratification bonuses, which are onetime in nature.

In addition, we returned $215 million to our shareholders through the payment of dividends and paid $8 million to retire debt and finance lease obligations. Finally, and most notably, I am proud to report we remain the only U.S. airline with an investment-grade rating by all three rating agencies, both Moody's and Fitch affirmed our rating during first quarter, and S&P reviewed and moved our rating unchanged. As ever, maintaining an investment-grade balance sheet is our utmost priority.

As I close, I want to reiterate that we are not starting the year as we had hoped, and that is undeniably disappointing. However, throughout my years as this wonderful company, I have come to know that a better Southwest is often formed on the heels of adversity. I agree with Bob that is all because of the fight and warrior spirit of our people. And with that, I will turn it over to Ryan.

Ryan Green -- Executive Vice President, Chief Commercial Officer

Thank you, Tammy. As Bob mentioned, I'm going to provide you with details on our first-quarter revenue performance and base trends. I'll also share an outlook for the second quarter and full year, along with what we are assuming in the guide. And most importantly, I will give you some color on the additional actions we are taking to further improve our revenue performance.

Starting with first quarter, unit revenue finished roughly flat on 11% capacity growth, both on a year over year basis. The variance to our original guidance is driven by a balance of higher-than-expected completion factor, close-in leisure volumes that came in below our expectations in the month of March and underperformance in select development markets. Development markets as a portfolio did not meet the maturation expectations, but the story isn't the same for all markets. Several development markets outperformed expectations, particularly Florida Beach destinations.

But a few markets weighed down the portfolio. As Bob shared, we have made the difficult decision to address underperforming stations with closures effective August 4th and also to restructure and reduce capacity in other underperforming markets which are included in our updated June schedule. Despite coming in below our expectations, first quarter had strong demand, setting numerous records, including record first-quarter operating revenue, ancillary revenue, passenger revenue, and record first-quarter passengers carried, and we also added a quarterly record number of new Rapid Reward members into the program. In addition to these records, we were also really pleased to see the continued incremental benefits from our investments in managed business as first quarter managed business revenue grew 25% year over year and was roughly flat to 2019 levels.

We continue to pick up market share year over year as we perform in line with or above the rest of the industry. Finally, from a geographical perspective, we saw the strongest year over year improvements coming from the West Coast and the Northeast, regions where demand has been slower to return post-COVID. I also want to stress that we had a better than historically normal sequential trend in nominal unit revenue. We are seeing improvement in revenue productivity and demand.

Nominal RASM in the first quarter came in flat to fourth quarter despite first quarter historically being seasonally softer than fourth quarter. And this is particularly true in a post-COVID environment where peaks and troughs are magnified. To illustrate this point, consider 2018, the most recent year in which Easter fell in the last weekend of March. Nominal RASM declined sequentially 5 points.

So even in the seasonally challenged quarter, the sequential performance was much better than our best holiday comparison. The most significant driver of this sequential improvement was our network optimization efforts, but we also saw a benefit from our other revenue initiatives, especially managed business investments. Looking to second quarter, we expect our ninth consecutive quarter of record revenue performance. In fact, we expect an all-time quarterly record for operating revenue.

Second quarter 2024 RASM after being calibrated for recent booking trends is now expected to decrease in the range of 1.5% to 3.5% year over year. The year over year comparison includes a little over 1 point of headwind for holiday timing, both from outbound Easter shifting to the first quarter and for more outbound for the July travel shifting to third quarter. On a nominal sequential basis, this also implies another quarter of better than seasonally normal RASM improvement. Looking beyond second quarter, network planning teams are still reworking schedules in the back half of the year to accommodate Boeing delivery delays.

After adjusting expectations for both current booking trends and for Boeing delivery delays, we are forecasting 2024 operating revenue growth to approach high single digits on a year over year basis. This expected revenue growth implies healthy RASM growth in the back half of the year driven by revenue initiatives as well as a reduction in year over year trips. While our development market maturation efforts are off track, which I'll discuss in a moment, our other revenue initiatives are expected to continue to drive value over the balance of the year. In fact, network optimization benefits contributed roughly $100 million in incremental revenue in March alone, primarily from reductions to shoulder flying early morning and late evening flights and short haul flying.

For full year, the incremental year over year pre-tax profits from our strategic initiatives is now estimated to be between $1 billion and $1.5 billion after being updated for first-quarter actual performance, development market adjustments, and capacity changes in the back half of the year. The vast majority of the initiatives delivering value in 2024 continue to be revenue related. So while we are encouraged to see strong demand for our brand and solid sequential improvement, it is short of our goals. And as Bob and Tammy shared, it's simply not enough given the escalation of market-driven inflationary cost pressures.

Therefore, we are taking actions to generate both immediate and longer-term revenue enhancements. We have stood up cross-functional teams to focus on things like accelerating the maturation of development markets further boost the value being delivered by our relatively new revenue management system and roll out new products and highlight our superior value proposition with our new brand campaign. We also have a larger team that is finalizing a more significant set of strategic initiatives, and they're tasked with delivering transformational streams of revenue productivity. Of course, we'll have more to share on this topic at Investor Day.

As we build our plans, we will focus on leveraging our strengths, including those of our network, which, while it has optimization opportunities, remains incredibly relevant and well-positioned based on size and population migration trends. We continue to hold the top position in 22 of the largest 50 domestic markets, and we are by far the market leader in that regard. Also, we're well positioned for the future as population and GDP growth trends are forecast to be strongest in the Southern and Mountain West regions of the country, regions where we have significant leadership. We'll also lean into the customer experience we deliver.

Year to date, our Trip Net Promoter Score is up over 5 points year over year. And finally, we continue to enhance our award-winning Rapid Rewards program just this week, we began rolling out the ability to book and pay with part cash and part Rapid Rewards points, which I expect to be very popular with our customers. So in closing, we have a large and relevant network, a strong demand environment and a loyal and highly engaged customer base. We also have the best people whom I want to sincerely thank and we are committed to being aggressive and innovative as we adapt, adjust and evolve to meet the preferences of our customers and to unlock the revenue productivity required to meet our financial imperatives.

With that, I'll turn it over to you, Andrew.

Andrew Watterson -- Chief Operating Officer

Thank you, Ryan, and hello, everyone. I'd like to start out by thanking our incredible Southwest employees for continuing to deliver a strong operational performance. We produced a solid first-quarter completion factor of 98.5%, our highest first-quarter performance over the past 5 years. We delivered year over year improvement in early morning originators, turn compliance and turn differential, and mishandled bag rate and again saw a year over year improvement in our net Trip Net Promoter Score, as Ryan mentioned.

Our on-time performance declined slightly year over year, largely due to weather challenges and delays driven by ATC programs. However, I'm pleased to report that we improved year over year on-time performance for the month of March. I'm proud of the hard work and investments made to bolster our win preparedness and modernize our operations, and I'm encouraged to see these efforts pay off in our operational performance. Picking up with Bob and Tammy left off, I want to stress that we remain focused on bringing out operational inefficiencies, increasing asset productivity and creating operating leverage by reducing structural costs.

Our Southwest Turn initiative, which Bob shared is tracking ahead of schedule is a critical component of these efforts. One of the key elements include eliminating the need for printing on every flight, reducing the number of employee trips up and down the jet bridge and we're covering faster during the regular operations. We reached an important milestone in this multiyear effort just last week with the launch of electronic fight folders, which modernized several of our flight planning processes by digitizing documents used by our pilots, dispatchers and ops agents. We also continue to make progress on modernizing the airport experience, and that initiative is also coming together faster than originally planned.

Our efforts for improving the lobby customer experience are on track to provide improvement to staffing standards ahead of the original schedule. We are working on updated schedules and look forward to sharing those with you as well. I'd also like to highlight a new application called SkyPath we recently implemented [Inaudible] for pilots and dispatchers to provide better awareness of turbulence along the flight path. This industry-leading system uses iPad sensors and GPS data from pilot's electronic flight bags to turbulence in real time, aggregating and sharing data from across -- from users across several airlines in North America.

Our teams worked cross-functionally to accelerate the launch of this app for the spring season when we tend to see more turbulence across the network. And it's another tool we can use to support employees with additional information for decision-making, improve the onboard experience for customers and reduce operational risk. We look forward to sharing more on these and expensive of multiyear initiative-based efforts at Investor Day in September. Finally, I'd like to close by congratulating all of our employees who reached agreements on new contracts over the past year or a little bit more than a year plus.

Each contract requires a significant amount of work. And as always, we remain committed to rewarding our deserved employees. With that, I'll turn it back over to Julia.

Great. Thanks, Andrew. That completes our prepared remarks. We will now open the line for analyst questions.

To allow for as many calls as possible, we ask that you limit yourself to one question and a brief follow-up if needed. We will now take the first question.

Questions & Answers:

[Operator instructions] Our first question today comes from Michael Linenberg with Deutsche Bank. Please go ahead.

Mike Linenberg -- Deutsche Bank -- Analyst

Good morning, everyone. I guess, Tammy, I just want to -- on the bonuses to the employees incurred in the March quarter. Just can you remind us that number again? I thought you I heard it. And then is it just we're going to see another piece in the second quarter with the approval of the flight attendant contract, by the way, congratulations.

But another piece in the second? And then is that it for the year? If you can just remind me of those numbers.

Yes. Mike, First of all, we are thrilled to have an agreement with our wonderful flight attendant. And at the end of the quarter, we had roughly $625 million accrued for labor agreements that we expect to pay out for the remainder of this year.

OK. Great. And then just my second question, Ryan, I recently, I've seen you give some presentations and talk about redeyes and redeye flying coming to Southwest Airlines. And I think you said it's about a two-year time frame.

I'm just curious, what are the gating issues? What are the things that need to get done to be able to actually implement them? Because it does seem like a pretty long time, but I do realize it is something new for Southwest.

Ryan Martinez -- Senior Vice President Finance, Controller

Yes. Mike, the -- we can move technology time lines around by reprioritizing things here and there. And so some of the gating -- their crew scheduling changes that need to be made on a -- from a Red-eye standpoint, there are some changes that need to be made with some of our operational systems. And we can choose how fast or how fast to do those things and what elements go before or after them.

So the two-year was rough estimate. We can go faster than that if we choose to do so. But it's just kind of a myriad of technology-related items.

Yes. This is Andrew. I'll add on that some of the kind of bigger issues so us down was with our contracts, our reserve periods. We had two reserve periods for the pilots in particular and didn't allow for good coverage of red-eyes.

And so with a new contract we'll eventually go to three reserve periods and allow us to better have reserve pilots on standby, should there be a problem. So we didn't want to have those -- one of the larger scale, those flights unexposed or exposed rather to no reserve. So the new contracts allow us the flexibility to have extra reserve periods and that makes us much more comfortable proceeding.

Mike, this is Bob. You didn't ask this, but on the why, maybe not just the timing, but Obviously, we've known for a long time, our customers want red-eye Flying. It's a little bit limited in scope, but there are red-eye flights that are very desirable for our customers. And so we wanted to do this.

It also allows us to add capacity just like this turn work where you can add the capacity, and there's no capex related. You are just using the aircraft and higher utilization. So that's something we want to do, obviously. And then in a period here where we are overstaffed because we were shooting for a higher fleet number any incremental flying like that makes sense, obviously, it alleviates at least a piece of that overstaffing with our pilots.

So that's one to give a background on the why in addition to the how long.

Great. Thanks very helpful everyone.

The next question is from David Vernon with Bernstein. Please go ahead.

Dave Vernon -- AllianceBernstein -- Analyst

Hey. Thanks for taking the question. So Bob or Ryan, I think last quarter, we were talking about premium on the call, and you guys had made the comment that this is something that's cyclical, it comes up, it goes down. People put too many premium products in the cabin and then they have to take them away in the down cycle.

Is the work that you're doing now in terms of looking at the product assigned that this shift could be something more permanent. Can you guys just help us understand how your view of the market may be changing a little bit that's precipitating this sort of more strategic review?

You bet, and thanks for the question. I think maybe I'll just start a little wider, which is are always studying what our customer preferences are and if they're changing, that's out over time, and we're committed to meeting them. It's over time, we've added things like WiFi and now we're adding seat power, we've added a large overhead bins, and so we're committed to meeting our customers' preferences. And just to be transparent, we've been seriously studying this question around onboard seating and our cabin for a while.

And to get it what you just said, which is an understanding of what customer expectations are today. I'm proud of our product today, and our customers love it but it was designed at a time when load factors were lower and higher load factors do change the way preferences work, the operation works and also, our customer -- the customer expectations change over time. So there's no decision. There's nothing to report other than we are seriously looking at this.

But early indications, both for our customers and for Southwest look pretty darn interesting. So I'll just leave it there and more to follow.

I appreciate that. And maybe just as a follow-up on the same topic. Is this, if you were to go down this path, obviously, there's going to be cost of the cabin. But technologically, from a passenger service system and all that kind of stuff, like how complicated might that be to kind of think about doing things like seat assignments or segregating the cabin in some harder way.

Is that a big technological challenge? Or is that something you guys already have the capability to do, but just aren't doing?

Well, we just don't -- I don't want to get into details because a lot of those we don't have. Again, we're looking at customer preference. Obviously, the -- how would you do it technically, how long would it take? What impacted any would it have on the operation Obviously, what's the financial impact all of those things beyond the customer preference going to how you make your decision. So again, I'll just say we're looking at this very seriously and more to come and we look forward to sharing where we are at our Investor Day on September 26th.

And Bob, our PSS is the industry standard Amadeus tool, which obviously works in those environments. So the underlying system is not prohibitive from doing that. That's right.

All right. Thanks for that and thanks for taking the questions.

The next question is from Duane Pfennigwerth with Evercore ISI. Please go ahead.

Duane Pfennigwerth -- Evercore ISI -- Analyst

Hey. Thanks. Just geographically, can you speak to how much differentiation you're seeing in unit revenue trends. You have a pretty broad-based domestic network, could you just comment on like relative strength versus relative weakness geographically across the country?

Duane, I think there is definitely regional performance. I mentioned in the prepared remarks that the West Coast did well, particularly intra-Cal RASM and margins are up double digits year over year. Phoenix is doing really well. Vegas is doing really well.

Of course, Vegas had some assistance there with the Super Bowl being there in February in the first quarter. But all those markets performing very well. The Northeast performed well. In Florida, there's been a lot of talk about Florida.

Florida, we have above system average RASM. In Florida, it's come under pressure with some of the capacity growth there, but still RASM is above system averages in Florida. So there's strength across the network. Of course, we've got some weaknesses in the development markets, which we've talked about, and we've got plans underway to address with the station closures that we've talked about.

And then we've restructured some of those development markets and some of the schedules that we've had to republish here as a result of the Boeing delivery delays. But yes, there's -- as always, with the network, the -- it's a portfolio and you've got markets that performed better than others. We're focused on making some improvements in those development markets.

OK. Appreciate the thoughts. And then just on your capacity exit rate, or was it down low singles, low to mid-singles by the fourth quarter. How should we be thinking about early 2025 and are we still in a dynamic where seats are down more than ASMs.

In other words, I think that was by several points, maybe 5 points or so that seats were trailing ASMs. Is that still the dynamic in the fourth quarter?

Yes, Duane, thank you. And again, I'll just remind you that we're -- this is all very fluid as we work with Boeing on their delivery estimates. And obviously, '25 is more fluid than '24 and also, we are choosing how we -- so as we get some indication from Boeing, we're choosing how we're going to plan, which may be different because we don't want to have to go through this replanning the schedules over and over because it's very, very disruptive. So it's early to give you a signal on '25.

But that said, I just would point out again that any capacity is going to come through either gauge or initiative-based additions, again, like the turn time work or red-eye flying. And so again, it's too early. But I think you're thinking directionally correctly, I'll just stop there. And Tammy, do you want to add something?

Now the only thing I just might reiterate is we'll look to align our capacity growth for 2025 and with demand. So we've got a little bit of time here. And obviously, one thing I'd point out is we do have fleet flexibility by design. So we'll continue to evaluate that.

And then just at a higher level, again, we do plan to grow below macroeconomic growth trends until we get our financial going in the right direction to achieve our goals.

And maybe the other thing to add, too, just to disconnect from Boeing is the work on the network that work to moderate, significantly moderate our capacity isn't just Boeing. I mean, this is something we need to do. We need to manage ourselves, manage our appetite, continue to mature the network continues, as Ryan said, to work on the part of the network that is underperforming and moderate our capacity until we are hitting our financial targets, obviously, moderating your capacity manages down capex managing down capex is critical to free cash flow. It all helps us achieve our ROIC targets.

So I don't want to lay this at the feet the capacity discipline and the network adjustments are Boeing, we are doing those things because we need to do those things to restore our financial our progress against our financial targets, and we will absolutely continue on that path until we get there.

And I think you take the sources of growth that Bob talked about and the network restructure that does imply that our central tenancy is for seats to trail ASMs and for trips to trail seat. That's a natural consequence of those actions.

OK. Appreciate the thoughts from the team. Thank you.

The next question is from Jamie Baker with J.P. Morgan. Please go ahead.

Jamie Baker -- JPMorgan Chase and Company -- Analyst

Hey. Good afternoon, excuse me, good afternoon. Yes. So Tammy, how should we be thinking about operating cash flow for the rest of the year? I mean we've got the retro component in there with the flight attendants but presumably, a weaker demand outlook suggests some pressure on the air traffic liability.

And then related, I guess, somewhat to that the dividend consumes, what, $450 million a year, $450 million of cash. Any idea how the board is thinking about that in light of some of the challenges that you articulated today?

Yes. Jamie, we're focused, as Bob said, on generating free cash flow. Ultimately, we're working to restore our financial returns. So this year, we're very focused on what we can't control.

And we are working on lowering our capex. That's already come down quite a bit, as we've already shared. And just in terms of the liquidity targets that we have established with our board, we do have a minimum cash target of $6 billion, which, of course, is on top of our revolver. So we're really working to manage, obviously, our operating cash flows and very focused on that as we've taken you through in our remarks and also working to balance that with our capital spending.

So we are happy that we have our dividends reinstated. So plans, at least at this point with the board. But obviously, we'll continue to have those discussions as we move throughout the year. And again, Jamie, too, we our goal as ever is to maintain our investment-grade balance sheet and work toward our long-term leverage goal which is in the low to mid-30% range.

Obviously, we're sitting higher than that now, but we have our eye on that goal as well.

OK. And then Bob, so question, when you report earnings, does management then break up and host townhalls throughout the company. The reason I ask is that some airlines, some companies do that. I honestly don't know of Southwest.

But I have to wonder, I mean, is the tone with the front line as somber as it is on this call. I mean, I guess it's hard to answer, but if I was in Baltimore right now, chatting up employees, do they get what's going on right now and just how grim this guide is. And the reason I ask is that clients are asking me if today's messaging is just reserved for Wall Street or if this is truly an all hands-on deck call for change, much like what Richard Anderson delivered at Delta in 2012, which in fairness did represent a real turn for that franchise. Any thoughts?

Yes. Jamie, there's a lot in your question. So let me just start with we -- just to balance things out. Our financial returns are nowhere close to what we need and what we want them to be, period.

And we will be relentless until we achieve those. The company -- so that is absolute. The company is not grim. In other words, we have significant demand for our product.

We have awesome employees. We have real improvement in our operational performance and reliability. We had the best completion factor in five years. We have some of our highest NPS scores ever on and on and on.

So the company has a pile of just absolute attributes that our customers love. So I would sort of separate it agree in terms of our financial returns, which I agree and the company is grim. Now your second -- your question is, is that -- does everybody know that? And are we aligned? Absolutely. We had a special all senior leader meeting Tuesday, as an example before this, to walk through exactly what we need to be doing, how to be thinking, what to be doing around the plan, how to be executing.

I have multiple times per year, meeting with every leader at this company, from supervisors on of, it's 4,000 people, where I can talk directly to them about what we need to be doing. The messaging may be slightly different. In other words, the messaging for them may be how they need to think about costs, how they need to be thinking about winning and capturing and retaining customers. But absolutely, there is a line of top to bottom and focus.

We have a solid plan with solid actions that we are all committed to and it's comprehensive. And it all drives toward restoring our financial returns and hitting our ROIC targets. We are committed to continued network adjustments to specifically address underperforming markets. We're committed to adjusting our capacity and managing down capex, as we just talked about, or created -- we're committed to creating capacity through initiatives like the turn reduction and the red-eye flying because that creates capacity while spending on aircraft .

We're committed to enhancing our revenue performance and our demand through tuning our RM system and the major marketing efforts that Ryan has underway to drive demand and loyalty. We're committed to offsetting our cost pressures through efficiency efforts and programs to reduce headcount. We're going to be down 2,000 this year, down further next year, and we're down close to another 800 right now on top of that through these through these voluntary time off programs and we're committed to a set of new strategic initiatives. I've hinted it, boarding and seating and the cabin, and we're going to share those with you at Investor Day.

Bob, thank you very much for that answer. I appreciate it greatly. Take care.

There's time for one more question. It will come from Savi Syth with Raymond James. Please go ahead.

Savi Syth -- Raymond James -- Analyst

Hey. Good morning. If I might, just on the business revenue, that was a good performance here. I was curious what your to 2Q outlook is reflecting in terms of expectations and what you're seeing there?

Savi, yes, managed business was up very healthy in the first quarter, up 25% and reached a significant milestone in getting back to flat to 2019 levels. So we were really pleased. With that, that was driven by a double-digit increase in unique travelers traveling under a contract in the managed business space. So that just means we're penetrating deeper into accounts.

We're growing the number of companies under accounts, and we continue to pick up market share there. As we look forward, we expect the performance to continue and to accelerate the sequential performance in the second quarter to be better than the first. And it's kind of -- it's across the board. Our top 15 industries, 11 of those had double-digit growth year over year.

So, the performance is widespread, and we expect it to continue and to help our revenue performance as we go forward.

That's helpful. If I might just ask just question related to capex. And just given your current outlook, talk Tammy, on kind of free cash flow generation here and kind of looking forward a little bit, what's realistic?

Yes, Savi. We're -- as we said, we're expecting capex this year at $2.5 billion and that includes about $1 billion in aircraft spend. We are working through our plans for next year. So it's a bit early to give you guidance for next year.

Obviously, we're working through that actively now. So we'll update you on our capex spending plans as part of our comprehensive update in September at our Investor Day.

Is the view that kind of is free cash flow generation important and possible? Or how are you thinking about kind of translating that capex into.

We are absolutely working with the view to generate free cash flow. We -- that will obviously be part of the equation as we pull together our plan for next year.

Appreciate it. Thank you.

OK. That wraps up the analyst portion of today's call. I appreciate everyone joining and have a great day.

Ladies and gentlemen, we will now transition to our media portion of today's call. Ms. Whitney Eichinger, chief communications officer, leads us off. Please go ahead, Whitney.

Whitney Eichinger -- Chief Communications Officer

Thanks, Gary. Welcome to the media on our call today. Before we begin taking your questions, Gary, could you remind us and share instructions on how to queue up for questions?

[Operator instructions] And the first question comes from Alexandra Skores with the Dallas Morning News. Please go ahead.

Alexandra Skores -- Airline Reporter

Hello. Can you all hear me? OK, perfect. I'm wondering if we could hone in on the four airports that were announced today that would be cut and same less Atlanta and Chicago that are being reduced in flight. Could you talk a little bit about the decision to -- for those specific airports to be chosen?

Well, it's never -- I'll just start with this. It's never an easy decision to close a station or to materially reduce flights in the station. We love our airports. We serve our communities, and so it's always difficult.

But again, I'll just go back to we have portions of the network a higher-than-normal portion of the network that's just not performing to the level that we need. And for a variety of reasons. And so we need to hit our financial returns, and we will. And so you have to make the tough decision to continue working down the level of markets that aren't performing.

So it was really that. It's just as we look at -- as we look at our network, it really relates to the areas that are just don't have a path to the level of financial performance that we need. That's really the basis for the decision. I don't know, Ryan, if you want to add anything else or Andrew?

No, you covered it, I think.

And my second question, what kind of communications have been given to the employees at those airports.

We have a very -- as you would expect, we take care of our employees, we take care of our partners, and we have a very rich communication plan that to go in the right order to make sure we communicate with folks it's done with compassion. Our employees will be offered jobs in other cities. And so they have a lot of options. But no, we handled all this, as you would expect, Southwest Airlines to handle.

We staged senior leaders there last night. So a very early morning hours, our people -- our leaders were there to explain the wise to the employees as well as to the airports and then also to go through with them the different options they'll have for moving it's a seniority-based system with our unions and so how that will all work for them. And so they've gone through that. There's obviously a range of emotions.

People chose to relocate there, and so they will have some natural disappointment in the short term, but these people have long careers in Southwest Airlines that our ground employees tend to move around a decent amount anyway. So we expect most of them to take advantage of not all of the opportunities to relocate to other stations.

Got it. So that's every employee that's impacted is going to be offering some sort of job.

Yes. They were an employee, they chose to do so.

Got it. Thank you.

The next question is from Mary Schlangenstein with Bloomberg News. Please go ahead.

Mary Schlangenstein -- Airline Reporter

I appreciate it. I wanted to see if you could talk about the extent of the reductions in O'Hare and Atlanta.

There are about -- we took about half of a here down from about 30-something flights, about 15, 18 flights on the season day of week. So it's about a 50% reduction at in Atlanta. I can be on the top of my head, Ryan, it was 30%. I want to say the third [Inaudible] it's unfortunate we had been restoring Atlanta over the course of post-pandemic.

We could never quite get back to the level of performance we needed at the scale we needed and so it's been reduced back down to a level, so just shortly coming out of the pandemic. And so it's still substantial activity there. It's just not as big as it was before.

Great. And if you could also address the impact of the new refund policies that were announced by the DOT yesterday, whether that's going to be a financial problem for Southwest? Or if you expect to have any trouble complying with those new rules?

Mary, it's Ryan. Well, it's new. As you know, it was just issued yesterday. So we're digesting exactly what all of that means.

But based on our read so far, I don't expect that it's going to be a significant impact. Of course, we already have the most customer-friendly policies in the industry. So we're best positioned to comply with any of these new regulations out of the gate. And today, if there's a long delay or a cancellation, customers can receive a refund from Southwest.

So there's no real change there from our standpoint. And then, of course, unique in the industry, flight credits don't expire with Southwest, if you have to cancel your flight for any reason. But in general, we're proud to be unique among airlines in having these customer-friendly policies, no bag fees, no change fees, flight credits don't expire, we don't nickel and dime customers. But the -- those are our choices without government intervention.

And it shows the marketplace works as consumers want different choices in who they fly. So again, I'd just point to the fact that we have the most customer-friendly policies in the industry, and I just don't see a tremendous amount of impact to Southwest from these.

Next question is from Alison Sider with Wall Street Journal. Please go ahead.

Alison Sider -- Air Travel Reporter

Hey. Thank you so much. I know that the overall demand environment remains very strong. But I am curious if you're seeing any indications of bookaway or traveler nervousness about Boeing or air safety more broadly?

We -- I'll just give you a little overview and then obviously, Ryan can jump in. We -- this is something that we look at. So we study, we survey to understand our customers' views and whether anything that's going on impacts their view of Southwest or the industry generally. That's not perfect, but we don't see any -- we don't see an indication that this is having an impact on bookings or demand.

It's not perfect. I think logic would tell you there could be something there. But certainly, we don't see anything material right.

Yes. The only other thing that I would add is that we certainly are serving on the front end to see how top of mind it is for consumers when they're making a booking and then we also look at cancellations and ask customers once they cancel a flight, what their reasons for cancellations were and safety concerns or Boeing aircraft as a result of that on the cancellation side is 1% of our cancellation. So it's a very, very small number not material, I don't think, to the overall picture.

Interesting. And the four cities, the four markets that you're exiting, are those cities that you think would have been more successful if you had the MAX 7 in your fleet or had it coming soon?

I think the markets themselves were just performing at a level that we needed to make the tough choice to remove them from the network. And I don't think that a smaller aircraft would have had a material difference on those markets.

Next question is from Dawn Gilbertson with Wall Street Journal. Please go ahead.

Dawn Gilbertson -- Air Travel Reporter

Hi. Thanks very much for taking my call. Bob, about six months ago, you were asked, as you always are, about the premium question, the open seating versus the signed seating, and you mentioned, as you always do, that you always said to customer preferences and if something changes, you'll adapt as you said today. But here's what you said then.

You said there's nothing underway. There's no story here, nothing underway. So can you help us understand what has dramatically changed in the past six months on that particular front? And also related to that, is there any financially significant change to boarding or seating you can do without assigning seats?

You bet, Dawn. Thank you. I think the -- it's what you say that the difference is we -- this is something that we look at on sort of on the surface pretty regularly. But in terms of a very deep dive of understanding customer preference and what we might do, that's something we do less frequently.

So the answer was different six months ago because the work has really accelerated. It's work that we've done since then. And there's a lot of discussion out there about just cabin and premium and all kinds of things. So it may just generally in customer preference.

So it makes sense in terms of timing to study that. Again, we always want to understand what our customers want and desire. And so again, we're -- I'll just again to tell you that we are very seriously studying this, and we're pretty deep in that study. And again, nothing to reveal today except that there are some interesting indications in terms of what this could mean to us and what it can mean to our customers.

Again, that's nothing to reveal. On your question about are there other things you can do in boarding in particular? Our boarding process, we changed actually it's over. I think it's a decade ago at this point is very well received by our customers because it's very organized and the way you line up we have worked hard to monetize that and give our customers choice. You -- we give you choice around how you think about your boarding position and that's more important to some customers than others.

But we've got that. We've got Business Select. We have an upgraded boarding at the gate product. I will admit, it is hard for me, Ryan might tag in here.

It's hard for me to think of how we can really from a financial perspective or a customer desire perspective really push that even further. I think the products that we've added really attack what our customers want. So being just blunt. It is hard to think about how to implement more products related to boarding.

Yes, I would agree with that on the incremental products. But what we are doing and what we can continue to do is to get better at how we price those products and drive incremental yield from those ancillary products. In total, our ancillary revenue in the first quarter was up 18% year over year. So well in excess of our O&D passenger growth.

So we continue to push on optimizing for revenue there on our ancillary products, particularly the boarding products, but in terms of adding incremental products, it's tough to imagine how that would fit into the current boarding process.

If I can follow up then. My question is about -- you're talking about transformational changes here, and you're hinting at boarding and seeding. So can you do what kinds of things can you do, if anything, that doesn't involve assigning seats because to me, that would be transformational for Southwest. Like what -- can you give us -- I know you're not going to go into any detail until Investor Day, but what specifically is going to be different because just I think the price of upgraded boarding and early bird is obviously not going to meet your financial goals, as you just said.

No, you're -- you -- I think you're exactly right, which is that's why you want to look at all of these things. And we're just not ready to tell you exactly what we're studying, and we're not ready to tell you then how that could, if we decide to go forward, turn into a different product design and a plan. But -- but yes, just conceptually, that where you're going is the reason we're looking at this is we know over time, customer preference has changed. They have my whole three, six years here at Southwest Airlines.

And we have changed a lot. We've changed our boarding. We've changed our the product that we offer on board. We added loyalty programs and a modified those.

So we are constantly changing to meet customer demand. So it's critical to understand three things: number one, what do your customers want. And that's really what we're studying right now. Two, what does that do to the way you operate the airline because we are obviously a bedrock of the company is operating very efficiently, having a quick operation, great turn times being efficient.

And so making sure that whatever you might want to do, it's fits in with that. And then obviously, the third piece is, is it financially beneficial back to hitting our financial goals a piece of this is, as Ryan mentioned, continuing to drive progress against our financial aspirations and goals and hitting our ROIC and margin goals. So all those three things have to work together. And we're just not ready to share details today.

but we will be, as we move across the summer and into our Investor Day in September.

Thanks, Bob.

The next question is from David Koenig with the Associated Press. Please go ahead.

David Koenig -- Business Writer

Thanks very much. Well, I was going to ask about the transformational options proceeding, but I think you've probably said all you're going to say on that, Bob. If I -- if you could go into a little bit of explanation on the 2,000 headcount reduction. First of all, I'd like to know how many jobs you think will be eliminated by the closure of those four airports and any drawdown at here in Atlanta and elsewhere.

And then secondly, are you saying that you can get to 2,000 fewer jobs this year just through attrition and leaves, can you rule out furloughs?

David, thank you. And yes, no, thanks for allowing me the ability to clarify that. We have line of sight on the 2000 that does not include furloughs. or anything like that, that we don't want to put on the table.

And then it also does not include a headcount that are effectively sort of out of the workforce in terms of not being paid because they are on voluntary unpaid leave. So it doesn't even count that. So this is really through attrition in some cases, reassigning folks to have the work that does need to be done. But it's also coming through pretty sophisticated initiatives.

We have initiatives underway to use Gen AI to automate the way we handle cut some of our customer support functions, generate responses, decide what to do with the customer request. We have other significant continuous improvement in automation going on in other parts of the company, and we plan to accelerate that. So not furloughs. It is primarily through planned attrition that we know we have a line of sight to.

So and again, the line of sight to the 2000 the folks that are effectively out of the workforce because we're not -- they're not being paid in their own voluntary time off programs. That's on top of the 2,000.

OK. And how many of the 2,000 do you think will be pilots?

Yes. I don't think we give a breakdown by work group, David. There'll be some that will be back office people that work at headquarters, some that will be a frontline we have. There's natural attrition that goes along throughout the company, whether one reaches retirement age or want to sites to go find a different job.

You have that natural. We have a good history on that, so we can model out what that's going to look like and which ones we need to backfill, which ones do not need to backfill and that's how we get to these projections. It's not any kind of reduction in force or eliminated people currently employed is more when physicians become available, not backfilling them.

All right. Thank you.

The next question is from Leslie Josephs with CNBC. Please go ahead.

Leslie Josephs -- Airline Reporter

Hi, everyone. Thanks for taking my question. Just knowing what you know now from these customer surveys about potential seating changes. Are you thinking that it could be like a big front seat or bigger front seat type product? Or do you think that at some point, there will be a curtain on a Southwest Airlines plan and secondly, are you ruling out baggage fees entirely? Is that still or is that something that's on the table for you as you're looking at revenue initiatives? And then on the 1% of bookings that were canceled because of concerns about air safety, how many people is 1%? And how does that compare with -- after the MAX crashes when the plane came back?

Leslie, I'll try and take all of those. The first one on what we're learning from customer research, I think just stay tuned there. We'll have more to share on what we're learning and how that factors into what we may do different, if anything, at all. I will say though, the Southwest Airlines is -- we will stay true no matter what we do to the brand and who we are and how we approach customers.

And I think things like curtains and things like that are a bit far field from Southwest Airlines is. On your bag fee question, no, we are not considering bag fees. The reason we're not considering bag fees is because people choose Southwest Airlines because we don't have bag fees. If you go look the most recent J.D.

Power survey, which obviously is an independent syndicated piece of research that's well respected in the industry. Over 60% of customers say that they choose Southwest Airlines as one of their top reasons because of bag fees. You -- companies love to have differentiation in their product that drives customer preference and drives customer choice. Our next closest competitor on that measure is Alaska gets 19%.

So we get three times the preference in terms of bag fees relative to our competition. So that's why bag fees are not on the table for consideration. On the 1% of cancellations, it's a very small number. We don't -- our overall cancellation rate is a very small number, so 1% of that is a very, very small number.

So it's not material.

Yes. And I'll just emphasizing that, Leslie, it's not 1% of our bookings, it got canceled because of all of those people who canceled. And so yesterday, 0.4% of people canceled and 1% of that 0.4% said it was safety concerns. So it's a very small number of an extraordinarily small number that did that, which is why Ryan would say is immaterial or even inconsequential.

And how does that compare with what the MAX came back in 2020 after the crashes.

That was also quite small. I mean we also track people who look at what the aircraft type is on the website and those really didn't see any movement of consequence in there. And so it seems like this is not something that customers investigate any great deal with the very early days of the MAX grounding, there were some interest heightened to that. When the MAX came back, it was -- we prepared as if it would be, I think, of interest and it was not a thing of interest.

And currently, customers are acting if it's not a thing of interest as well. So it's I think that even though Boeing is having individual controllers as a company, customers are trusting at least Southwest Airlines and that we will operate our aircraft safely.

The next question is from Rajesh Singh with Reuters. Please go ahead.

Rajesh Singh -- Airline Reporter

Bob, all the additional voluntary one time of programs that you're considering, does that include the pilot as well?

Rajesh, this is Andrew. And so what we're doing right now that we've spoken of is the voluntary time off has roughly been with our ground operations flight attendants and some of our call center people. They've taken advantage of that for flexibility in their programs. We do not have anything with our pilots at the moment.

A provision of our contract requires us to consult with them, and we will certainly do that before we do anything with regards to our pilots.

Bob, you said that you were encouraged by Boeing's approach. Can you please share some specific examples and color that make you feel encouraged about their approach?

Andrew, again, I'll take that because I was up there with Bob on our visit. And so really, we're impressed by how Boeing is putting kind of quality ahead of short-term profit, so to speak. So an example is, they have many portions in their factory. There's like 10 stations they go through the construction.

They don't allow anything to progress past stage 3 that has traveled work. And so that creates gaps in their factory, which then leads to obviously a plane that's not sold and delivered that month. The fact they're taking this very strong approach to bring quality out in the early stages of the production process from their suppliers is a much different approach. And frankly, as when to put safety ahead of profitability in the short term.

But it's obviously they're a long-term interest. So we were very impressed by that kind of not just change of awards, but by change of actions.

Yes. You want to see the tone at the top be appropriate, which is an understanding that -- again, I can't speak for Boeing, I'm just thinking about how we view this but a tone that recognizes that this is a big issue, and it's bigger than a quality escape. And to some extent, it is a cultural issue. And so they need to attack it very broadly.

And that is the way that they -- our view when we visit with them, that is the way that they appear to be tackling that, as Andrew said, it appears to be showing up in their actions. Now at the end of the day, they have to deliver and -- but no, no, we are encouraged by what we're seeing.

And have you increased your inspectors at the Boeing sites following the last fire incident?

Thank you for the question. In 2022, we increased from having just a representative, which other airlines have to having a team of AMP certified mechanics on process, on site to inspect our aircraft as they go through the production process. I believe there's north of 85 inspection points that they look at between entering the factory and exiting the factory. And so -- that is the way we assure day-to-day that our quality of aircraft is maintained.

We additionally have the engagement at the executive level that Bob talked about where we also see good results. So overall, are heightened attention to Boeing and the quality of the aircraft they manufacture has been going on for a while, and we think it's bearing fruit.

The next question is from David Slotnick with TPG. Please go ahead.

David Slotnick -- Aviation Business Reporter

Good afternoon. Thanks for the question. And going back to the transformation, you said that you're looking at changing customer preferences. And I'm sort of just wondering what perspective you're taking on that? Like are you looking at this as something where because of those preferences customers are choosing to book other airlines over Southwest? Or are you looking at this as maybe a place where Southwest is missing an opportunity to revenue on premiums or upsells what your rivals are from existing passengers?

Ryan can give you much more detail, but I think you want to know all those things. You want to know -- why do customers book Southwest? What do they expect to Southwest? You want to know why do they book others and not Southwest Airlines, you want to know if they have preferences for other things within our product that we don't offer today, how do you think about pricing, those kinds of things and how it affects their desire to book Southwest Airlines. But now you want to need to know all those things. And again, additionally, in addition to the customer preference, you need to know what does it do for the operation and how we how -- how quickly especially we turn our aircraft and we're studying that as well.

I think you hit it all. Clearly, with any sort of transformational change, you're going to have a very robust, highly scientific, very sophisticated statistical models and research methodologies to test all of those things that Bob walked through. that's what anybody would expect of a company like Southwest, and that's the rigor at which we are approaching studying this issue.

And I mean, back to the question before just considering the share of their revenue that your rivals are earning from upsells and from premium. Do you think you can really rule out something like a curtain in the cabin?

Look, we're going to study customer -- like we've said, we're going to study customer preferences, but there's strong demand today for Southwest Airlines and the brand that we put and the product that we put in the marketplace today, it has worked for us for over 50 years, and customers understand well who we are and what we bring to the marketplace. We're not going to try to be somebody that we're not. And so we'll study it all, but we're -- at the end of the day, we're going to remain true to who Southwest Airlines is.

I think you also have to look at the revenue per square foot and you get in the cabin. And so it can be seem like you won't want to have a fancy product. But if it doesn't generate revenue off of that square foot, you have in the cabin, then it's necessarily not worth it. So we take a strong eye to the revenue that any of our products would generate as we evaluate this.

And I think the -- I know we've said this probably 20 times on the call today, and I think the other short answer is we're not ready to go into detail. We have work to do here, obviously, to continue to finish up our work and then if there are things we do want to change, to understand how we would do it in the Southwest way. And so we will be back with detail when we're ready. And if there is something that we're going to change, we're aiming to do that at our Investor Day, which is planned in September, and we'll share obviously a lot more of that.

This concludes our question-and-answer session for media. So back over to Whitney now for some closing thoughts.

Thanks to everyone who joined us today. If you guys have any further questions, our Communications Group is standing by. Their contact information along with today's news release are all available at swamedia.com.

[Operator signoff]

Duration: 0 minutes

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Southwest Airlines (LUV) Q1 2024 Earnings Call Transcript was originally published by The Motley Fool

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