It goes without saying that a lot has changed about Southwest Airlines in recent times. Under financial pressure from activist investors, the airline has started charging for checked bags, has introduced basic economy, and has introduced assigned and extra legroom seating.
For several months now, there have been rumors of the Dallas-based airline considering a new type of flying. This is basically confirmed at this point, as the airline engages unions to enable this kind of flying.
Southwest expected to launch Iceland service
Enilria has reported on how Southwest is planning to launch flights to Keflavik, Iceland (KEF) by late spring or early summer of 2026. The expectation is that the first route will be from Baltimore (BWI), which is a major hub for the airline. At 2,762 miles, this route would be well within range for the Boeing 737 MAX 8. Flights are reportedly expected to go on sale as of the fall of 2025, assuming everything can be finalized by then.
Southwest is also considering flying to Keflavik out of Nashville (BNA), which is another big market for the airline. At 3,239 miles, that’s much closer to maximizing the range of the 737 MAX.
While Southwest currently operates a limited number of international flights, this would be the carrier’s first service to Europe, so it would obviously be a major development for Southwest.
Admittedly Southwest is limited in terms of its potential to fly to Europe, at least with its current fleet. Sure, some Ireland service is possible with existing aircraft. Rumor even has it that Dublin (DUB) will be Southwest’s second European destination. However, that’s about it — don’t expect the 737 MAX to be flying to Continental Europe anytime soon. Then again, Southwest executives have said that nothing is off the table, from long haul flying, to first class, to lounges, so who knows how this evolves.
Southwest has basically indirectly confirmed that it’s pursuing this kind of expansion, as the airline has explained how it’s engaging labor unions to update its contract, in order to serve new international destinations not currently covered by the contract:
Southwest Airlines has notified TWU Local 556 that, in accordance with Article 24.5.D., they wish to engage in discussions regarding a potential Side Letter of Agreement to serve a limited number of new International destinations not currently covered by our Contract. Based on the initial information, the Company’s requests will be limited in scope, with only a few destinations served by our current MAX aircraft fleet.
As part of its transformation, Southwest recently started introducing airline partnerships, with the first partner carrier being with Icelandair. For now, this is a really casual partnership, which just consists of an interline partnership. We know the two airlines want to work more closely together, so in that sense, having Iceland as the first destination is pretty logical.
Southwest’s real motive for flying to Iceland
On the surface, Southwest flying to Iceland is unlikely to be terribly profitable. This just comes down to the competitive landscape — Icelandair operates to all kinds of points in the United States year-round, with impressive frequencies, and the carrier has a much lower cost structure than Southwest. So, why would Southwest actually fly to Iceland? Well, it comes down to a couple of factors.
For one, we know that Southwest wants to develop a codeshare agreement and offer reciprocal loyalty perks with Icelandair, which would be a closer level of cooperation than the interline agreement that the two airlines currently have.
Southwest has strong labor unions, and in order to allow the airlines to codeshare, pilots are reportedly requiring that Southwest also fly its own metal to Iceland. This isn’t that unusual in the industry, since of course pilots want to look out for their own jobs.
The second point is equally big. Southwest is no longer differentiated domestically, in the same way it used to be. The airline has basically eliminated everything that made it special, instead copying the competition. So the airline needs to find other ways to attract customers and keep them loyal.
Obviously loyalty programs are a huge motivator for airline service nowadays, so it seems highly likely that this would also be part of making Rapid Rewards more lucrative, to increase the ways that members can redeem Rapid Rewards points. After all, Southwest hasn’t historically offered redemption opportunities on partner airlines.
I have to imagine that as Southwest and Icelandair partner together more closely, we’ll see a huge emphasis on enabling award redemptions on Icelandair, so that Rapid Rewards members can travel to all over Europe. This will probably be easy enough to implement, since Rapid Rewards is revenue based, and that same principle can apply for Icelandair redemptions.
Honestly, close cooperation between Southwest and Icelandair could also be a game changer for Icelandair, if they’re getting a significant number of Rapid Rewards customers on their flights (both among those paying cash and those redeeming points).
Bottom line
While plans could still change, Southwest Airlines is pursuing launching flights to Iceland as of 2026, with the first route being from Baltimore to Keflavik, followed by a flight out of Nashville. This is something that would’ve likely seemed unthinkable several years ago.
The route is unlikely to directly be that profitable, so the logic here is quite simple. Southwest wants to develop a closer partnership with Icelandair, and pilots are requiring that the airline be able to fly its own metal to Iceland. Furthermore, being able to offer points earning and redemption opportunities to destinations across Europe could make Rapid Rewards much more interesting to people.
What do you make of the prospect of Southwest flying to Iceland?
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