Southwest Airlines announces new partnership with Icelandair

But Southwest doesn't stop there. They plan to add at least one more international partner next year. It's a smart move that will help them compete with the big, established airlines without having to make the massive investment of launching their own long-haul routes. This could mean more opportunities to use your Rapid Rewards points and potentially gain access to a wider range of destinations.

Southwest is tight-lipped about the details, but also hints at some changes to Rapid Rewards. Think international flight redemptions and better perks for A-List and A-List Preferred members. I'm excited to see how this develops. Will we see better redemption rates for international flights? Are there other ways to collect qualifying points for each level? The possibilities are fascinating.

Why Icelandair makes perfect sense for Southwest

Icelandair, similar to Copa Airlines, operates a hub-and-spoke network between the US and Europe. With 34 destinations in Europe, they've pretty much covered the entire continent with aircraft similar to what you'd expect when flying within the US, with a business class that's more like a domestic first class seat than a berth. For me it's not worth the extra cost.

I'm not someone who worries about a reclining seat on every single flight across the pond. The flight time from BWI to Reykjavik (KEF) is about six hours, almost as long as a Transcon or a recent flight I took from DC to Cancun. That's not a length of time that would kill me sitting in a regular seat, especially if the price is right.

And the price excites me the most. Icelandair's BWI-KEF flights often cost less than $500 round-trip in economy class. If Southwest maintains the same redemption rate of about 1.4 cents, that means those flights in economy class are eligible for about 35,000 Rapid Rewards round-trip. Of course, we don't know the details yet, but I can't wait to find out.

The end of the Southwest tussle?

Here's a shocker: Southwest is introducing assigned seating. I know it's hard to imagine the Southwest without the mad rush to claim its place. However, according to a Southwest survey, 80% of their customers want this change. Count me firmly in that camp. I won't miss checking in 23 hours and 59 minutes before my flight to be rewarded with the dreaded “C” boarding group.

And if you're tall or just want a little more space, you'll be pleased with the introduction of premium seats with extra legroom. This move toward a more differentiated product offering could appeal to travelers who are willing to pay a little more for added convenience.

Southwest Credit Cards: What's Coming?

Southwest's credit card offerings will inevitably be affected by the new seating and benefit options. As new seating options emerge, you can expect some improvements to card benefits. Maybe priority access to the new premium seats or redeeming points for seat assignments? We'll have to wait and see, but it's worth keeping an eye on if you're a cardholder or thinking about applying.

Learn more: Best airline credit cards.

I'm particularly excited about the idea of ​​using Southwest Rapid Rewards points for European travel. The new route options, along with the Chase Ultimate Rewards cards, make Southwest credit cards more attractive to me since Southwest is a Chase transfer partner. You also have to wonder how Southwest's famous Companion Passes might work in the new partnership.

Currently, Southwest offers several credit card options, each with their own perks and annual fees. For example, the Southwest Rapid Rewards® Priority Credit Card offers benefits such as an annual Southwest® travel credit of $75 per year and 7,500 anniversary points per year. As the airline continues to develop, we can expect these card offerings to also adapt.

Southwest Rapid Rewards® Priority Credit Card

Introductory bonus

Earn 85,000 bonus points when you spend $3,000 on purchases in the first three months from account opening.

Annual fee	$149
Regular APR	21.49%-28.49% variable

Our opinion

If you're a hiker in the Southwest, this card might be worth it for the daily free WiFi alone. Add in anniversary points and strong rewards rates for Southwest purchases, and you'll more than recoup the annual fee.

Rewards

Premium prices

• 3x 3X points on Southwest® purchases
• 2x 2X points for Rapid Rewards® hotel and rental car partners, mass transit and commuter services, including rideshare, internet, cable and phone services; Select Streaming
• 1x 1X points on all other purchases

Card details

• Additional Perks: 25% discount on board, 1,500 TQPs for every $5,000 you spend each year, 10,000 points off when you purchase the Southwest Companion Pass






• Foreign transaction fee: None

Learn more

at Cardratings.com

Learn more: Best travel credit cards.

What doesn't change

Before you start thinking that Southwest is becoming another major airline, let's talk about what stays the same. You'll still get two free checked bags, and the policy remains that there won't be a change fee, so you can easily rebook when prices drop. At a time when most airlines make you pay for everything, these policies continue to set Southwest apart.

Rapid Rewards points still have no blackout date, do not expire, and reward slots remain unlimited. This commitment to maintaining the core strengths of their loyalty program is reassuring. That suggests that while Southwest is evolving, it's not forgetting what made it a favorite with budget travelers in the first place.

Outlook: Southwest's broader strategy

These changes are part of a larger transformation plan that Southwest calls “Southwest.” Even better.” Aside from the partnership with Icelandair and the seat changes, they have a few other tricks up their sleeves:

• “Short breaks in the southwest”: A new vacation package product launching in 2025 that offers customizable packages with Southwest's signature flexible policies.
• 24-hour operation: The airline will launch Redeye flights in key markets from February 2025. This could be crucial for travelers looking to maximize their time and minimize hotel stays.
• Operational efficiency: Southwest is working on faster aircraft turnaround times and other measures to optimize its operations. While this may not sound exciting, it could lead to fewer delays and a smoother travel experience, which is especially necessary after the infamous meltdown in December 2022.

The takeaway food

These changes could open up some interesting travel opportunities. Use Rapid Rewards points for a trip to Europe? Don't have to worry about the entry level position to sit with your family? Sounds pretty good to me.

But it's not just about convenience – these moves enable Southwest to compete more effectively in the global airline market. Of course, we'll have to wait and see how the whole thing develops. Southwest is trying to grow up without forgetting what made them so popular in the first place. It's a difficult balance, but if they can pull it off, it could be a win-win for travelers.

The key is execution: Can they implement these changes while maintaining the friendly, efficient service they are known for? Whatever the case, I think it's going to be quite a ride.

Welcome to What's in Dia's wallet? In this monthly column, I share what's in my wallet, but also what's on my mind. After dealing with credit cards for over a decade, traveling an average of 100 nights per year, and earning and spending over a million points each year, I've learned a few things. If you have any questions or ideas for future topics, please contact me [email protected]. Dia Adams, Editor-in-Chief

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