Southwest Airlines is hoping to heat up the popularity of its credit cards with help from new Hawaii routes. What does a new route to sunny Hawaii have to do with credit cards? The budget airline doesn't take a whimsical approach to choosing its new routes. Southwest actually uses a detailed evaluation process to determine which routes will benefit the airline the most. The type of research that goes into every decision includes how many travelers already use existing routes and how much travelers are willing to pay for fares. However, there's one more factor that goes into route selection that might not be obvious. Southwest also picks routes based on the potential for those routes to bring in new credit card applicants.
How Southwest Plans to Use a Route to Hawaii to Boost Credit Card Applications
Southwest's most prized customers are the ones who own its Chase-branded credit cards. Southwest has used the data that it is available regarding customers to determine that frequent travelers and Chase cardholders really want free flights to Hawaii. The big obstacle standing in the way of Southwest satisfying this desire has been that the airline didn't actually have an airplane that could make the trip throughout the year with a full cabin. That meant that offering such a flight simply wasn't a lucrative option for the airline. That's all changing now that the 737 MAX has entered the picture. Southwest will soon be offering flights to Hawaii from the West Coast. However, no announcement has been made yet regarding where the new route will depart from. The airline has announced that flights could begin as early as this year.
Southwest may not see a big increase in new credit cards among people on the East Coast or in the middle portion of the country once it introduces its new route from the West Coast to Hawaii. However, the airline does expect to see a big increase in new cardholders in portions of California like Los Angeles, San Diego, Sacramento and the Bay Area. That's because people living in those areas are the most likely to take year-round trips to Hawaii. In addition, Southwest already has a big presence as a carrier in the country's West Coast market.
Why Credit Cards Are Critical for Southwest's Growth
Revenue from partnerships with credit cards is serious business for airlines today. Southwest Airlines has a lot to gain by focusing on boosting its current relationship with Chase. The airline made $2.8 billion in 2017 just from selling miles to Chase. The revenue from selling miles during the previous year reached just $544 million.
Southwest Will Face Competition in Hawaii
Hawaii has been singled out as a hot spot for travel by several carriers in recent months. Both Hawaiian Airlines and United Airlines introduced new routes to Hawaii from the West Coast recently. However, all of the fares that have been introduced so far have been relatively high. Southwest is hoping to make its mark on the market by offering a route that can be utilized by top-tier members of its loyalty program to enjoy free flights to Hawaii throughout the year. It is betting on the fact that the promise of free flights to this sunny destination will inspire more travelers to sign up for a Chase-branded Southwest credit card.