A slew of new Southwest credit card offers come with one year of Companion Pass, but only for new signups and not for loyal existing cardholders.
What Is Southwest’s Companion Pass
For those that can fully utilize Southwest Airlines Companion Pass, it’s one of the best deals in domestic travel. I have a more detailed description of the Companion Pass in this post, but the basics are as follows:
- One named companion can travel for just the cost of taxes and airport fees with the passholder for any flight so long as there is at least one ticket available for the companion.
- Companion Pass members can change their named companion up to three times in a calendar year. That could be “Companion A” to “Companion B” to “Companion C” or back and forth from “A” to “B” as the holder likes.
- Companion Pass applies to both Rapid Rewards redemptions as well as cash tickets
- Valid from the date the Pass is earned through the end of that year and all of the following (if you qualify in January, you will have 24 months, if you qualify in December, you’ll have 13 months with the Pass)
- Transfers from Ultimate Rewards credit cards like the Chase Sapphire Preferred Card or hotel points programs do not count toward earning Companion Pass, but points from shopping portals, credit card earnings, and flying do.
When my family of three last held the pass, my daughter was under three years old meaning that we could fly for just the cost of my ticket (in points or cash) and all of us were included. That made just about every weekend eligible for a quick getaway. We were able to continually top up from our Ultimate Rewards accounts (though I wish American Express was also a transfer partner) to fly free (plus taxes and fees) on over 20 trips during that period. We didn’t often utilize the two free checked bags that Southwest offers, but for many travelers, that’s a big benefit.
New Southwest Credit Card Offers Companion Pass For All
Southwest announced a new promotion for all of its consumer credit cards (sorry, no love for the business credit cards) that requires $5,000 in spending within three months of opening any of those Southwest Airlines cards. The promotion gives new cardholders a Companion Pass through February 28th, 2023 (essentially one year or a little less) and an award of 30,000 bonus points deposited into a cardholders Rapid Rewards account.
This version of the Companion Pass operates as other Companion Passes do with the same benefits of getting up to the last seat on any Southwest flight but just lasts for a shorter period of time and is far easier to obtain – as long as you haven’t received a Southwest credit card bonus in the last 24 months and have not opened more than 5 credit cards in the last 24 months (5/24.)
This is objectively a good deal for consumers who:
- Are eligible for the bonuses
- New to the brand
- Able to take advantage for the Companion Pass in the coming year
How Should Loyal Customers Feel?
When my wife’s Companion Pass ran out, we didn’t close the cards. We spend on them for Southwest flights as they earn more points on Southwest purchases and closing the account would have an adverse effect on her credit score. It’s also enough to keep them open because they offer retention points for keeping it open every year which offsets the cost of the annual fee.
Still, I am perturbed as many other loyal cardholders likely are.
We could sign up for the Southwest Rapid Rewards Premier card, the only consumer card we don’t have and qualify for the bonus and the year of Companion Pass. We failed to open one on the airline’s 100k bonus offers so this could replace that with lower spending and less hassle.
However, when I think about the readers who hold the card, friends, and family too – they would see tremendous value in the Companion Pass but just don’t want or need a new card. They could easily push more than $5,000 in spending on their card in the three months, many would gladly push all of their spending (likely $25,000-30,000/year) to their current card if that would qualify them for the current year and maintain it for future years.
But there’s no love at all if you have already been a cardholder. This just doesn’t make sense to me. Those customers already have the card in their wallet, there is lower transactional friction for them to move a significant amount of spend and engagement to the cards they already have.
It’s clear that this isn’t really about trying to gain travelers that can spend more on their cards as was the 100k offer with a requirement of spending $25,000 in the first six months to achieve it. This also isn’t about engaging customers to spend more throughout the year, these bonuses solely require initial spending to achieve and maintain the Pass. This is about trying to get new customers for its card products and the bar has been lowered to achieve this.
Is Southwest Running Out of New Customers?
Southwest clearly feels confident in maintaining its base customers that hold its products now. There’s a good reason for that too. One of the first major cards to introduce annual retention bonuses, the cards do produce solid value for cardholders including no foreign transaction fees, multiplied earning for spending on local transit and commuting including rideshare programs like Uber and Lyft, as well as the Premier card that offers a $75 annual Southwest credit.
The question that I pose, is why would the airline offer this with such a low barrier? While $5,000 may look like a lot to some, it’s just $1,667/month and with spring break approaching, and frankly, significant inflation, it’s more achievable than most people think.
Southwest tried the mega offers with huge spending requirements. It’s broken into the semi-premium card market, though its $149 annual fee is hardly in the realm of Capital One X, Chase Sapphire Reserve, or the American Express Platinum cards. The business market is good, but this doesn’t apply to those products anyway. Southwest appears to be targeting solely the lower end of the market for these cards. Reduced spending requirements, lower bonuses, and a limited run of the Companion Pass seems as though Southwest wants to introduce new markets to the airline and its cards.
Typically, earning 125,000 points requires two card sign-up bonuses to achieve excluding any huge bonus offers or significant flying or spending. That Pass lasts for up to two years (but few customers get a full two years out of it) so on a pro-rata basis half would be a fair approach, meaning that 62,500 miles to achieve the Pass and one sign-up requiring $3-4,000 in qualifying spend would make it an even offer.
It’s also a possibility that the airline is suffering from a loss of engaged travelers. The carrier was one of few travel brands in the US not to grant some form of an extension to its most frequent flyers. United, who granted some but not all has already issued an unannounced advance on elite qualifications amidst lower qualification requirements. Could this be a sign that the decision not to extend A-List despite its limited benefits has, in fact, cost the carrier travelers?
If Southwest is looking for new customers to tap, it seems like the airline could find tough sledding ahead. The carrier is already the largest domestic operator in the US, it’s expanded to Hawai’i, the Caribbean, and flies to just barely north of South America in destinations Aruba and Panama City, Panama. From South Florida and Houston Hobby, newer 737 aircraft should have the legs to make it to Colombia and potentially even Ecuador but will find stiff competition from United out of Houston, American out of the Dallas metroplex and Miami, and Spirit and JetBlue out of Fort Lauderdale.
If it’s just credit card customers the airline is looking for (which makes sense as often loyalty programs are more profitable for a carrier than flying people and cargo), then this is a bigger market but might signal an end to growth. There’s also a chance that the carrier upsets bigger spending customers that are turned off by only being eligible for adding yet another Southwest card to their wallets.
My theory, and it remains just that, is that the carrier expected a bigger rebound on travel credit card sign ups than they have seen. Putting out a huge point bonus which, in essence, achieved more than these offers do (because those points could be redeemed for free flights and granted the Companion Pass for two years instead of one) might have pushed aside consumers concerned with being able to spend $25,000 in six months.
That said, if they are looking to drive incremental revenue, spending targets for existing cardholders might have been a better start, even if it were to run parallel to these new lower offers.
Regardless of whether Southwest is a) trying to introduce consumers to the (usually) rarified perk of Companion Pass, b) trying to drum up new customers, or c) trying to generate growth because the last campaign didn’t see enough – clearly Southwest needs fresh meat and not stale customers.
It could be sour grapes or maybe it’s simply a different philosophy. I always find that it’s easier to get a happy customer to spend more with you than to find one that’s not chosen to do business with you heretofore. For the largest domestic carrier and an airline that flies to every major and many secondary cities, those that haven’t yet tried the brand are few and far between. Companion Pass has always targeted the highest spenders so giving entry-level options is an excellent way to introduce more to the product, but is this a sign of trouble?
What do you think? Is this a sign of generosity, a new target market, or an unsuccessful 100k campaign? Are you going to apply for the new Southwest card promotions?