Southwest Airlines is currently undergoing a major transformation, including introducing assigned & premium seating, adding redeye flights to the schedule, and more. The airline has now announced plans to introduce airline partnerships, which represents a major shift from the carrier’s current approach to these kinds of arrangements.
In this post:
Southwest will introduce global airline partnerships
Starting in 2025, Southwest Airlines intends to start formalizing partnerships with international carriers, in order to connect customers with more global destinations, to generate additional demand for travel across the Southwest network.
Icelandair will be Southwest’s initial partner, with an expected launch in 2025 at Baltimore International Airport (BWI), which will serve as the first US gateway for the carriers. The Icelandair partnership will expand gateways throughout 2025, to include other gateways. Furthermore, Southwest intends to add at least one additional partner carrier next year.
It’s not yet clear exactly what this partnership will look like, and if it will include a codeshare agreement, frequent flyer reciprocity, etc. To state the obvious, I think it’s a sure bet that Southwest won’t be trying to join one of the global alliances, and won’t be partnering with any major US airline. Clearly this is just about generating additional demand at long haul gateways.
Southwest is a massive airline, but up until this point, hasn’t offered any airline partnerships, so this is a pretty major development. Interestingly, around two years ago, Southwest had a job posting for the position of “Senior Manager Airline Partnerships.” So it’s clear that this is something that Southwest has been working toward for some time.
This isn’t going to be some goldmine for Southwest
I suppose it makes sense for Southwest to partner with some global airlines, but I don’t think this will materially change the carrier’s financials for the better. There are two major issues here.
The first issue is that this kind of traffic generally isn’t very high yield, based on how revenue is split. I mean, a transatlantic Icelandair economy ticket might cost $500, and Southwest would be getting a small percentage of that revenue.
The way these agreements are structured differs, but the airline might be getting revenue based on the percentage of the total trip distance it carries a passenger. You can bet that these tickets connecting to global partners won’t have the same revenue per segment as if Southwest sold the seats directly. But I suppose it’s a way to sell seats.
The other general challenge here is that Southwest’s fare types just aren’t very compatible with those of other airlines. For example, Southwest includes two free checked bags on all fares (and this policy will continue), which is a way more generous policy than with most other airlines.
So I’m curious how this will work in the context of these partnerships, when Southwest passengers are connecting to an airline that doesn’t allow any free checked bags, or maybe allows one free checked bag, on a particular fare.
Bottom line
Southwest Airlines will be launching airline partnerships as of 2025. Icelandair will be Southwest’s first airline partner, and the plan is for the partnership to kick off for connections in Baltimore (BWI), with plans to add connections at other gateways in the future.
Ultimately it makes sense for Southwest to find more ways to fill seats, though this isn’t likely to be some cash cow for the airline, especially when you consider that Southwest tends to command more revenue per seat mile than most other carriers with these kinds of arrangements (given all that’s included with Southwest fares).
What do you make of Southwest launching airline partnerships?
I vaguely remember Southwest having a partnership with Icelandair briefly in the 1990s, not long after expanding eastwards to BWI.
Ben, respectively, I think you're missing the forest for the trees here. I don't think this partnership is about the incremental revenue some interline tickets with Icelandair will bring, but rather it begins to chip away at the "Southwest can't take you overseas" mantra. What WN is doing (I think) is trying to eliminate the reasons people give for not even considering the airline. Assigned seating, premium seats, and now international partnerships all do that.
*respectfully. Gah!
While Icelandair may not be that meaningful as a revenue generator, it allows SW to dip its toes into the EU market.
Hey Lucky, just so you're aware, WN used to partner with Volaris back in the day
One question that I have not seen answered...will we be able to use the SW Companion Pass on IcelandAir?
IATAs ‘most significant carrier’ rule determines baggage allowance on interline connected itineraries. In 90%+ of cases Icelandair will be the MSC as it is the one traversing different geographic zones, and Southwest will have to deal with charges related to that. This will be the most interesting thing to watch related to these partnerships IMO, as it runs counter to Southwest’s historical marketing.
For itineraries beginning or ending in the US, the DOT has a different rule which supersedes the IATA rule: the 'first marketing carrier' rule. So starting in the US, Southwest will decide the bag allowance. Starting abroad, Icelandair will decide.
Just flew Icelandair in the past few days. I don't see much revenue for WN out of this deal for Icelandair charges for everything except for a glass of water. I found it to be more of a boot & back pack crowd looking for the cheapest way to and from Iceland with possible connections to Europa.
Those flying in the premium section of the jet (SAGA) will be ticked with UA, AA, or...
Just flew Icelandair in the past few days. I don't see much revenue for WN out of this deal for Icelandair charges for everything except for a glass of water. I found it to be more of a boot & back pack crowd looking for the cheapest way to and from Iceland with possible connections to Europa.
Those flying in the premium section of the jet (SAGA) will be ticked with UA, AA, or DL for the reminder of their trip into or out of the USA; WN is below their dignity.
As also noted, PAX who make a connection with a second carrier are looking to accumulate or redeem Frequent Flyer Miles or seeking seating upgrades. These items are not currently available at WN.
This raises an interesting question - when you have a codeshare ticket that doesn’t include bags for some reason, do the airlines share a portion of the baggage fees as part of the revenue sharing agreement? Or does the first carrier just keep it since it’s not part of the base ticket price?
@timtamtrack - Take an international oneworld Y ticket with QF SYD-LAX-SYD, when paired with a QF award ticket for LAX-xxx-LAX as an example. Comes with full multiple piece luggage allowance on QF (1,2, 3 bags) for the international sectors and zero luggage allowance for the AA domestic sectors. For the QF award ticket, AA will enforce full luggage charges per piece on *all* domestic award sectors, *unless* you have some status with QF FF. Silver...
@timtamtrack - Take an international oneworld Y ticket with QF SYD-LAX-SYD, when paired with a QF award ticket for LAX-xxx-LAX as an example. Comes with full multiple piece luggage allowance on QF (1,2, 3 bags) for the international sectors and zero luggage allowance for the AA domestic sectors. For the QF award ticket, AA will enforce full luggage charges per piece on *all* domestic award sectors, *unless* you have some status with QF FF. Silver gets you one free AA bag, gold gets 2, Platinum 2 and Platinum gets 3.
Yes, the revenue gets packed in AA's back pocket I was travelling with 2 other people a few months ago, and despite discussing the above-mentioned rules with the AA check-in agent - and then a supervisor - AA regarded the ticket as "domestic-origin travel" despite being the award ticket being issued by QF LAX RES on QF ticket stock 6 weeks prior to travel. AA would not permit check-in without payment of the baggage fees, which for these 2 travellers was significant. It seems that this new policy is post-COVID since it hadn't previously applied pre-Covid.
Who carries 2 bags these days on domestic ? People are used to paying for bags and are generally travelling with carryon. Southwest fares are ridiculous these days compared to others. Just bring the price down and start charging for bags. Family of 4 don’t need 8 bags to check in, save me $$$
I have a friend that works in AV tech doing stuff like conferences, conventions, PR events, etc. He’s flown WN for years now because he has two gear “boxes” to check. Sometimes more.
Yes, obviously that’s the exception and you’re right, a family of 4 usually doesn’t need to check 8 bags, but you asked and there are people out there who travel extensively within the US and need multiple checked bags.
Can't he charge baggage fees to his company and/or the client?
Absolutely. It was more to respond to “who travels with two bags?” rather than the cost of the bags. If they started charging for bag fees I’m sure he’d increase the price he charges for events in kind.
He primarily works on the West Coast of the US, and WN’s schedule is vastly superior within CA/AZ in terms of frequency to any other carrier. The two free bags are a bonus.
My partner flies WN due to free bags...he travels for work with Matterport cameras and other equipment, so YES, people do use the 2 free bags for domestic work trips
I see this partnership aimed specifically at leisure travellers from overseas carriers. As Ben's article states, LUV will NOT be partnering with US majors for domestic travel, so the SW status quo will remain. As is stated above, 2 free bags is still an attraction for some.
However, often international leisure travellers who visit the USA for 3-4 weeks at a time, will carry winter and summer clothing, based on their itinerary. DEN for a...
I see this partnership aimed specifically at leisure travellers from overseas carriers. As Ben's article states, LUV will NOT be partnering with US majors for domestic travel, so the SW status quo will remain. As is stated above, 2 free bags is still an attraction for some.
However, often international leisure travellers who visit the USA for 3-4 weeks at a time, will carry winter and summer clothing, based on their itinerary. DEN for a week of skiing and HNL for some sun and sea.
There are a couple of simple truths here - in those cases, people don't necessarily want to be tethered to hotel washing machines every one or two days ensuring that they have a clean wardrobe, crimping their experience time. A laundry load evey 4-5 day is often more appealing for some.
Further, the additional work of selling these seats / bags proposition will not fall so much on SouthWest - it will be the partner responsibility. Also, virtually all of this subset of the market cannot avail themselves of US credit cards to cover free baggage with the major US legacy carriers unless they have a permanent US address / credit rating or have status with one of the major legacy loyalty programs. Maybe this will not be such a dumb idea by SW at all.
The only disadvantage is that it will add cost to Southwest's IT budget to overhaul their RES system - although that will be happening vis-a-vis the confirmed seating options being introduced anyway.
I am declaring the new term "bagdumping" when you book an Icelandair itinerary with an unneeded WN flight to get two free bags on the whole trip. :-)
LOL
Skipbagging?
I wonder how long it'll take for someone to get banned for doing this.