You are Free to Move Around Rewards

The Wall Street Journal's "Middle Seat" reported today on a speech from Laura Wright, Southwest’s chief financial officer during the Raymond James Growth Airline conference:

Southwest is working on revamping its frequent flier program... Ms. Wright says the revamp is expected late this year or early in 2010. Southwest also plans to overhaul its Web site, which she says ranks third in use among travel Web sites, between Mapquest and Google Maps.

Currently, Southwest’s Rapid Reward program offers free tickets based on only on the number of trips you fly. It seems a long time coming that the program would transition to rewards that scale with the value of the flight. FMV definitely expects that to change – towards something more in line with Miles Flown or Dollars Spent. What will be more interesting is if they start offering tiers of elite customers, including priority boarding, free drinks and point bonuses.

However, this change coupled with the revamp on the website announcement leads us to believe that there is a lot of new technology coming to LUV. FMV wonders if they can hit the right combination of revenue-enhancing changes while keeping their "little scrappy airline" image. The public comments following the WSJ article suggest we are not alone.

The Southwest Effect

You've probably heard of The Southwest Effect. Of course you have, it's got a Wikipedia page. This is when a certain carrier enters a market and miraculously brings low fares to the previously persecuted denizens of the region. Not unlike a Robin Hood for air passengers.

We always kind of figured there was a little bit of bravado in such claims. Consider it a touch of marketing for the good ole boys to discuss at Rotary meetings in Podunk, USA. No longer. A colleague was buying flights to Minneapolis (MSP) from Chicago this week, a day tripper, business meeting. It resulted in a severe pain in the wallet, and he came to FMV for help.

As it turns out, help is on the way. Do yourself a favor, and spot check CHI-MSP fares, using the distribution channel of your choice, for a day-trip in February. Then lather, rinse, and repeat in March. Chart it all up, and you'll probably find something like this:



Look at that. You can go ahead and guess the general date that the market welcomes a new entrant. Or maybe the winter tourism business drops off in March or something. Draw your own conclusion, but Minneapolis probably hasn't been this happy since Garrison Keiller moved to Lake Woebegon. And now we're believers.

Southwest = Complete Clarity

Once again, we have to hand it to Southwest. With the US majors struggling to boost revenue and cut costs, not a day goes by without a carrier looking like an anti-consumer enemy of the state in the news. Yet Southwest emerges with their value proposition as clear as ever: Basic air transportation at a decent price with no nickel-diming.

They drove it home with a full page ad in today's WSJ (and likely elsewhere) featuring a coupon (redeemable only on Southwest) reading "DON'T #$*!% ME OVER". The coupon is followed by a list of the various fees Southwest does not impose. The message is simple, and brilliant, and it will resonate not only with Johnny Lunchbucket trying to enjoy some R&R, but also with the coveted business crowd.

They also unveil a new tagline, "Fees Don't Fly With Us". Of course, neither do we (three letters for you, MDW). However, we can understand why people do. And we suspect many more will. Pass the peanuts.

Drinks on my company!

For those living under a rock, Southwest announced some new changes to their fare structure and product this week.





We love the throwback strategy of using alcohol to entice business travellers. But otherwise, it's just more of the carrier moving away from it's no-frills past to embrace some complexity in order to drive more revenue from business customers:

• Bonus rewards credits for higher fares?



• Preferred boarding and seating for loyal travellers?



• Opaque and incomprehensible fare structure?

Hey! Who are you and what have you done to Southwest?

User Generated Marketing

The NBA Finals start this weekend. FMV doesn't care too much, though we'll probably keep an eye on a game or two. If you watch, you might see some new Southwest Airlines commercials, schedule to debut during NBA broadcasts, courtesy of the carrier's customers and employees. As you may know, the Southwest recently asked their fans to submit video spot ideas for their "Wanna Get Away" campaign.

This concept recently took off during the Super Bowl with Doritos, and it's only appropriate that Southwest has grabbed the idea for the airline space. Further genious from the carrier that managed to give customer service nightmares a positive spin with their television series, "Airline". Not only do they (presumably) save some payments to their ad wizards, but they more importantly further strenghten the unique bond they enjoy with their customers. Saving money, stimulating business, AND building loyalty. That's a tasty trio.

So while you won't catch FMV staying up 'til midnight to snag Seating Area A, this is just the latest reason we applaud Southwest's marketing team. View the video finalists here if you don't want to watch the Bulls make a post-season run.