Southwest Airlines 2013 Annual Report Download - page 17

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Under the program, members continue to accumulate points until the time they decide to redeem them. As
a result, the program provides members significant flexibility and options for earning and redeeming rewards.
For example, members can earn more points (and/or achieve tiered status such as A-List and Companion Pass
faster) by purchasing higher fare tickets. Members also have significant flexibility in redeeming points, such as
the opportunity to book in advance to take advantage of a lower fare (including many fare sales) ticket by
redeeming fewer points or by being able to redeem more points and book at the last minute if seats are still
available for sale. Rapid Rewards Members can also earn points through qualifying purchases with Rapid
Rewards Partners (which include, for example, car rental agencies, hotels, restaurants, and retail locations), as
well as by using Southwest’s co-branded Chase®Visa credit card. In addition, holders of Southwest’s co-branded
Chase Visa credit card are able to redeem their points for items other than travel on Southwest, such as
international flights on other airlines, cruises, hotel stays, rental cars, gift cards, event tickets, and more. In
addition to earning points for revenue flights and qualifying purchases with Rapid Rewards Partners, Rapid
Rewards Members also have the ability to purchase points.
Southwest’s Rapid Rewards frequent flyer program also features enhanced A-List and Companion Pass
programs for the most active members and includes “A-List Preferred” status. Both A-List and A-List Preferred
Members enjoy benefits such as “Fly By®” priority checkin and security lane access, where available, as well as
dedicated phone lines, standby priority, and an earnings bonus on eligible revenue flights (25 percent for A-List
and 100 percent for A-List Preferred). In addition, A-List Preferred Members enjoy free inflight WiFi on
equipped flights. Rapid Rewards Members who attain A-List or A-List Preferred status receive priority boarding
privileges for an entire year. When these Customers purchase travel at least 36 hours prior to flight time, they
receive the best boarding pass number available (generally, an “A” boarding pass). “A-List” or “A-List
Preferred” Customers are automatically checked in for their flight in advance of departure. Rapid Rewards
Members who fly 100 qualifying one-way flights or earn 110,000 qualifying points in a calendar year
automatically receive a Companion Pass, which provides for unlimited free roundtrip travel for one year to any
destination available on Southwest for a designated companion of the qualifying Rapid Rewards Member. The
Rapid Rewards Member and designated companion must travel together on the same flight.
Southwest’s Rapid Rewards frequent flyer program has been designed to drive more revenue by
(i) bringing in new Customers, including new Rapid Rewards Members, as well as new holders of Southwest’s
co-branded Chase Visa credit card; (ii) increasing business from existing Customers; and (iii) strengthening the
Company’s Rapid Rewards hotel, rental car, credit card, and retail partnerships. To date, the program has
exceeded the Company’s expectations with respect to the number of frequent flyer members added, the amount
spent per member on airfare, the number of flights taken by members, the number of Southwest’s co-branded
Chase Visa credit card holders added, the number of points sold to business partners, and the number of frequent
flyer points purchased by program members.
AirTran’s A+ Rewards frequent flyer program currently offers a number of ways to earn free travel,
including bonus earnings for Business Class travel. A+ Rewards members currently can earn a credit for each
one-way trip flown or 1.5 credits for one-way Business Class travel. A+ Rewards credits currently can also be
earned for purchases made with an AirTran Airways A+ Visa card or an AirTran A+ Rewards Chase Visa credit
card, qualifying car rentals from Hertz, for purchases from other A+ Rewards partners, and in conjunction with
marketing promotions that AirTran may run from time to time. A+ Rewards members currently may purchase
A+ Rewards credits, extend the expiration of A+ credits, or give A+ credits to another member to help earn a free
flight faster.
The Company has enabled Customers to transfer their loyalty rewards between the Southwest and AirTran
frequent flyer programs. As a result, members have the benefit of the entire combined network for redemption.
For the Company’s 2013 consolidated results, Customers of Southwest and AirTran redeemed
approximately 5.4 million flight awards, accounting for approximately 9.5 percent of revenue passenger miles
flown. For the Company’s 2012 consolidated results, Customers of Southwest and AirTran redeemed
approximately 4.5 million flight awards, accounting for approximately 9.0 percent of revenue passenger miles
9