Southwest Airlines flight credits will no longer expire, an industry first

Good news for some travelers still hanging on to credits from canceled trips.

Southwest Airlines will get rid of expiration dates on all outstanding flight credits, including all future credits, the airline confirmed to TPG, a first among major U.S. airlines.

The policy does not apply to credits that have already expired, which would include some from flights that customers canceled during the first year of the pandemic. Any credits that expire on or after July 28, 2022, or are created from that date going forward, will be automatically extended indefinitely, the airline said.

That would include credits issued for canceled flights early in the pandemic, which had been extended several times through this coming September, Ryan Green, a senior vice president and chief marketing officer at Southwest, told TPG.

"Those credits were set to expire on Sept. 7," Green said. "We've eliminated the expiration date on those.

Allowing passengers to hold onto the value of flight credits indefinitely "aligns with the boldness of a philosophy to give our customers definitive simplicity and ease in travel, just like bags fly[ing] free, just like no change fees, just like points [not expiring] — they're a first-in-our-industry combination of differentiators that only Southwest offers," CEO Bob Jordan said in a statement.

As a first step, the airline will change the expiration date on some flight credits to a placeholder date of Dec. 31, 2040, pending IT work to allow the airline to issue credits without expiration dates. That work is expected to be completed later this year, the airline said.

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Customers must cancel flights at least 10 minutes before the scheduled departure time in order to get a credit on a non-refundable ticket. Customers with Southwest's highest three fare types can transfer a credit to someone else.

It was not clear how many individual flight credits Southwest had outstanding that would be immediately affected by the policy change, although travel credits made up roughly 6% of Southwest's air traffic liability, chief financial officer Tammy Romo said during a call on Thursday, or a little under $400 million.

"It's historically been maybe a little bit lighter than that," Romo added.

It was also unclear how many unused credits have been allowed to expire in the past year.

The issuance of flight credits emerged as a hot button issue as the pandemic began to wear on in 2020 and 2021. Airlines offered flexible cancellation policies on non-refundable tickets, allowing customers to put off trips in exchange for a flight credit. Each airline had different rules for expiration — although they were typically set to expire within a year, airlines offered various extensions as the pandemic continued and some did not feel comfortable returning to travel as quickly as others.

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Some airlines faced criticism from consumers and the Department of Transportation for pressuring customers into accepting vouchers in scenarios when airlines were legally required to provide cash refunds.

While no airlines publicly disclosed the details surrounding their issued flight credits during the pandemic, a TPG analysis in March, 2021 found that the major airlines had issued approximately 20 million vouchers in 2020, worth around a combined $10.4 billion