Southwest tries risky frequent-flier revamp

-- Jan. 07--Southwest Airlines is preparing a $100 million reboot of its Rapid Rewards loyalty program that ties frequent-flier rewards to the amount customers spend to fly the low-cost carrier. The sweeping revamp, unveiled...

But in courting new corporate customers, Texas-based Southwest risks alienating its large base of leisure travelers drawn by the carrier's no-frills, no-nonsense approach.

"It will be interesting to see how Southwest maintains its egalitarian nature, which has served it well for 40 years," said Henry Harteveldt, travel analyst with Forrester Research Inc. "On the other hand, how do they retain and reward their best customers? Democracy ends at the jetway door. That's where people are clamoring to say, 'Somehow, I'm better than you.'"

Southwest spent years redesigning the program, studying customer preferences and borrowing the practices of rivals, including acquisition target AirTran Airways.

Among new Rapid Rewards features:

-- Its points don't expire, provided members fly Southwest or use one of its partners once every two years.

-- A new top-tier of fliers, called A-List Preferred, will be created for those who log 50 flights or earn 70,000 points in a year. Southwest will lower the current threshold to gain A-List status by 20 percent, to 25 flights or 35,000 points.

-- Members will be able to purchase points to "top up" accounts to qualify for awards.

-- Members who hold the Rapid Rewards credit card can redeem points for flights to more than 800 international destinations, 70,000 hotels worldwide, cruises, golf vacations and other freebies.

Infrequent fliers may be baffled by the changes, however, said Randy Petersen, editor of InsideFlyer magazine.

"Southwest was known as the simplest frequent-flier program," he said. "The new program is pretty complex. Some people are going to be scratching their heads, saying, 'Gee, if I wanted a complicated frequent-flier program, I'll go join United's or Delta's.'"

It's also unclear whether the revamp will win over more corporate travel managers, since the carrier isn't known for offering aggressive discounts to woo corporate clients.

"I think procurement departments are more interested in discounts and business-related amenities than revamped rewards programs," said Jean Covelli, president of The Travel Team Inc., a wholly owned subsidiary of Buffalo-based Rich Products Corp. "Nine out of 10 of those rewards don't go back to the corporation."

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