What’s in Dia’s Wallet: Why I’m in luv with the new Southwest Airlines/Icelandair partnership

But Southwest isn’t stopping there. They’re planning to add at least one more international partner next year. It’s a smart move that’ll help them compete with the big legacy carriers without the massive investment of launching their own long-haul routes. This could mean more options for using your Rapid Rewards points and potentially accessing a wider range of destinations.

Southwest’s being coy with the details, but they’re hinting at some changes to Rapid Rewards, too. Think international flight redemptions and better perks for A-List and A-List Preferred members. I’m curious to see how this plays out. Will we see better redemption rates for international flights? More ways to earn tier qualifying points? The possibilities are intriguing.

Why Icelandair makes perfect sense for Southwest

Icelandair, much like Copa Airlines, operates a hub-and-spoke network between the U.S. and Europe. With 34 destinations in Europe they’ve pretty much got the continent covered with planes that are similar to those you’d expect doing flights within the U.S., with a business class that more resembles a domestic first class seat than a lie-flat one. For me, that’s not worth the upcharge. 

I’m not someone who’s worried about a lie-flat seat for every single flight over the pond. The flight time from BWI to Reykjavik (KEF) is about six hours, almost the same as a transcon or a recent flight I took from D.C. to Cancun. That’s not an amount of time that will kill me to be in a regular seat, especially if the price is right. 

And the price is what excites me most. Icelandair’s BWI-KEF flights often go under $500 round-trip in economy, and if Southwest keeps the same redemption rate of around 1.4 cents, that means these flights could go for around 35,000 Rapid Rewards round-trip in economy. Of course we don’t know the details yet, but I can’t wait to find out. 

The end of the Southwest scramble?

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

And if you’re tall or just like a little extra space, you’ll be happy to hear they’re adding premium seats with extra legroom. This move towards a more differentiated product offering could appeal to travelers willing to pay a bit more for added comfort.

Southwest Credit Cards: What’s Coming?

Southwest’s credit card lineup is bound to be affected by the new seating and perk options. With new seating options on the horizon, expect to see some tweaks to card benefits. Maybe priority access to those new premium seats or point redemptions for seat assignments? We’ll have to wait and see, but it’s worth keeping an eye on if you’re a cardholder or considering applying.

Learn more: Best airline credit cards.

I’m especially excited at the idea of using Southwest Rapid Rewards points for European trips. The new route options are making Southwest credit cards more appealing to me along with the Chase Ultimate Rewards-earning cards as 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 its own perks and annual fees. The Southwest Rapid Rewards® Priority Credit Card, for example, comes with benefits like a $75 Southwest® annual travel credit each year and 7,500 anniversary points each year. As the airline evolves, we can expect these card offerings to adapt as well.

Learn more: Best travel credit cards.

What’s Not Changing

Before you start thinking Southwest’s turning into just another big airline, let’s talk about what’s staying the same. You’ll still get two free checked bags, and they’re keeping their no change fee policy where you can easily rebook if prices go down. In an era where most airlines nickel and dime you for everything, these policies continue to set Southwest apart.

Rapid Rewards points will still have no blackout dates, won’t expire, and reward seats will remain uncapped. This commitment to maintaining the core strengths of their loyalty program is reassuring. It suggests that while Southwest is evolving, they’re not forgetting what made them a favorite among budget-conscious travelers in the first place.

Looking ahead: Southwest’s broader strategy

These changes are part of a larger transformation plan Southwest calls “Southwest. Even Better.” Beyond the Icelandair partnership and seating changes, they’ve got a few other tricks up their sleeve:

• “Getaways by Southwest”: A new vacation package product launching in 2025, offering customizable bundles with Southwest’s signature flexible policies.
• 24-hour operations: The airline will introduce redeye flights in key markets starting in February 2025. This could be a game-changer for travelers looking to maximize their time and minimize hotel nights.
• Operational efficiencies: Southwest is working on faster aircraft turnaround times and other measures to optimize its operations. While this might not sound exciting, it could mean fewer delays and a smoother travel experience, which is especially necessary after the infamous meltdown of December 2022.

The takeaway

These changes could open up some interesting possibilities for travel. Using Rapid Rewards points for a European trip? Not having to stress about boarding position to sit with your family? Sounds pretty good to me. 

But it’s not just about convenience—these moves position Southwest to compete more effectively in the global aviation market. Of course, we’ll have to see how it all shakes out. Southwest’s trying to grow up without forgetting what made them popular in the first place. It’s a tricky balance, but if they pull it off, it could be a win for travelers. 

The key will be in the execution: Can they implement these changes while maintaining the friendly, efficient service they’re known for? Either way, I think it’s going to be quite the ride.

Welcome to What’s in Dia’s wallet. In this monthly column I’ll share what’s, yes, in my wallet but also what’s on my mind. After over a decade covering credit cards, traveling an average of 100 nights a year, and earning and spending over a million points each year to do it, I’ve learned a few things. If you have questions or ideas for future topics please reach out to me at creditcards@fortune.com. Dia Adams, Senior Editor

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