Southwest Airlines 2014 Annual Report Download - page 17

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Likewise, the amount of points required to be redeemed for a flight is based on the fare and fare class
purchased. Under the program (i) members are able to redeem their points for every available seat,
every day, on every flight, with no blackout dates; and (ii) points do not expire so long as the Rapid
Rewards Member has points-earning activity during the most recent 24 months.
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 features tier and Companion Pass
programs for the most active members, including “A-List” and “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). 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 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.
During 2014, AirTran’s A+ Rewards frequent flyer program offered a number of ways to earn
free travel, including bonus earnings for Business Class travel. A+ Rewards members could earn a
credit for each one-way trip flown or 1.5 credits for one-way Business Class travel. A+ Rewards
credits could also be earned for purchases made with an AirTran A+ Rewards Chase Visa credit card.
The last day to earn or redeem A+Rewards credits in AirTran’s A+ Rewards frequent flyer program
9