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Exclusive: Southwest wants business travelers and will double down on them as it recovers from the pandemic

June 25, 2021
6 min read
southwest plane
Exclusive: Southwest wants business travelers and will double down on them as it recovers from the pandemic
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When Southwest launched 50 years ago, it did so with a cheeky bit of counterculture, undercutting established (and regulated) carriers with low fares across Texas, a lot of double-entendre and sex appeal, and plenty of free-flowing whiskey on board.

A lot has changed in the last 50 years. Southwest now wears a family-friendly visage, flies a sprawling route network across the continental U.S., Hawaii, the Caribbean and Central America.

Now, as it emerges from the COVID-19 pandemic, the airline has its sights set on another group that — to Southwest, at least — is untapped: corporate travel.

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In an exclusive interview with TPG at Southwest's 50th-anniversary celebration, airline president Tom Nealon laid out the airline's desire to sell tickets to managed corporate travel accounts as a central part of its post-pandemic growth plan.

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"The pie may be smaller, domestically," Nealon said, referring to the scale of post-pandemic business travel, "but we're going to have a bigger slice of it."

In 2019, Southwest announced a new "Southwest Business" team along with plans to begin selling tickets through several global distribution systems for the first time. That took effect in 2020, when the airline integrated its reservations system with Travelport's Apollo and Worldspan GDSs, as well as the popular Amadeus Travel Platform.

Until that point, Southwest had insisted on selling tickets exclusively through its own platforms, rather than through third-party systems, including most online travel agencies.

Many companies, however, use corporate travel management platforms — such as SAP's Concur — to manage their business travel. By refusing to participate in the GDSs, Southwest limited itself to business travelers who were allowed by their employers to book tickets on their own, or those who worked for companies with which Southwest had signed a direct deal.

According to Nealon, that was a large pie to miss out on.

"The corporate managed travel business is about a $10 billion business," he said. "That's just domestic coach travel. I guarantee you we are severely underindexed against that."

"So there's a lot of opportunity for us," he added.

(Photo courtesy of Ashlee Duncan/Southwest Airlines)

Some carriers have expanded and turned to counterintuitive practices to win some corporate accounts. United, for instance, restored transcontinental service from New York's JFK Airport — even though it previously suggested the routes were money-losers — in an effort to win contracts. For Southwest, Nealon said the plan is to instead double down on what it knows, simply focusing on expanding distribution.

"We've got the network, we've got the price points, we've got the frequencies," he said. "There's still so much growth for us within the 737 platform," he said, rejecting the idea of Southwest launching significant transcontinental — or even transoceanic — service in the foreseeable future. The growth opportunities are numerous, Nealon said, "whether it's Hawaii, whether it's Canada, whether it's just more depth and frequency within our core network."

Notably, the airline does not currently offer service to Canada, despite offering international routes to several destinations in the Caribbean, Mexico and Central America.

"The thing I love about our point-to-point service is that it's like a spiderweb," Nealon said. "The denser we make the spiderweb, the more frequencies and points of connections we bring in."

"There's still a lot of points on our network, after 30 years, that have never been directly connected. So there is so much connectivity still to bring into the core network."

That argument, of course, might sound familiar: It's the one made by JetBlue founder David Neeleman, talking about his new airline startup, Breeze, which will focus on the niche of point-to-point service between small- and medium-sized markets that have not been directly connected before.

Nealon, though, doesn't see a threat.

"We pay attention, obviously, because at one point 50 years ago, we were them," he said. "Very different business model, but we were a startup."

"It's very early days, but we take them seriously, we don't discount them," he added.

Related: How to quickly earn the Southwest Companion Pass

In 2019 and then throughout the 2020 pandemic, Southwest adjusted its destination airports, shifting around in New York and making a play for some unexpected markets, such as Chicago's O'Hare airport, after previously only serving Midway. That, Nealon said, is another move for business travel.

"There's a whole new client base, corporate customer base, that's out in northern Chicago," he said. Serving O'Hare helps appeal to business travelers.

And so does serving destinations like New York.

"New York is important for us, it's an important destination," he said. "It's not like we're the No. 1 carrier in New York, but we are the No. 1 carrier in other markets. And those customers originating in Nashville or Austin, we're it, and we need to get them to the desired destination, so that's New York's role in our network."

Related: Complete guide to Southwest elite status

Ultimately, the return of business travel — which, even without managed corporate travel, made up about 35% of Southwest's passengers pre-pandemic — may help the airline through the fall, when the restored leisure demand that is currently elevating the airline industry customarily dips.

"I'll tell you anecdotally, I'm starting to see more briefcases and sports coats than I saw a month ago," Nealon said. "We're starting to hear from corporate travel managers that they're chomping to go, so I think we're in recovery."

Whatever the future of Southwest holds, it will have a new leader at the helm to see it through. CEO Gary Kelly announced this week that he will be stepping down. Although Nealon had been considered a contender, Kelly will be succeeded by Bob Jordan, currently Southwest’s executive vice president of corporate services.

“Bob and I have worked side by side for more than 30 years,” Kelly said in a Wednesday statement announcing the transition.

“He is a gifted and experienced executive and well-prepared to take on this important role,” Kelly continued. “Working closely with President Tom Nealon and Chief Operating Officer Mike Van de Ven, we will begin developing transition plans in the coming weeks and months. These three top-notch Leaders make for a powerful team to lead us forward.”

Featured image by A Southwest plane taxis at Dallas Love Field (DAL) in June, 2021. (Photo by David Slotnick/The Points Guy)
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
1XEarn 1 Point per $1 spent on all other purchases
  • Intro Offer
    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

    Earn 80,000 ThankYou® points
    60,000 points
  • Annual Fee

    $95
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
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Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases