Sept 2 (Reuters) - Southwest Airlines on Wednesday unveiled plans to open its first-ever airport lounges, as the carrier steps up efforts to attract higher-spending premium travelers and diversify revenue streams.
The airline, which has been working to shed its low-cost image and boost ancillary revenue through assigned seating, extra-legroom seats and other product enhancements, said it would partner with JPMorgan Chase to launch its first airport lounges.
Airport lounges have become a powerful attraction for travelers as they offer a quieter place to work or relax, complimentary food and drinks and a more seamless airport experience. For airlines, they help lock in customers, support premium fares and drive spending on lucrative co-branded credit cards.
Southwest will roll out a new Chase-issued co-branded credit card in 2027 to provide customers access to its airport lounge network.
It initially plans to open four lounges in Austin, Baltimore, Honolulu and Nashville. Construction is underway, with the lounges expected to begin opening in late 2027.
Airlines worldwide have been hit by a sharp rise in fuel prices stemming from the U.S.-Israeli war in Iran, squeezing already thin margins.
Carriers with a stronger suite of premium offerings are better positioned to weather the pressure as they can lure travelers willing to pay more for higher-margin services such as premium seating, lounge access and other upgrades.
Southwest has been overhauling its business to better compete with the network carriers following pressure from activist investor Elliott Investment Management and weaker profit margins after the pandemic.
CEO Bob Jordan signaled in May that Southwest could add more cabin options, including "true first class," and is likely over time to delve into long-haul international flying. He, however, said those were still ideas.
Jordan has previously acknowledged that the carrier loses customers to rivals because it does not serve destinations such as London or offer premium amenities, including airport lounges.
Reporting by Shivansh Tiwary in Bengaluru; Editing by Shilpi Majumdar
Source: Reuters