Southwest Airlines' flight attendants could soon be selling credit cards on flights to stem pandemic
Southwest Airlines is asking flight attendants to sell credit cards during flights in exchange for a smaller pay cut as the company tries to navigate expected losses from the COVID-19 pandemic.
Dallas-based Southwest, which told union employees earlier this month they need to take a 10% pay cut next year to avoid furloughs, could start selling products during flights, including credit cards, as a way to increase revenue and make up for the dismal number of passengers booking fares.
The credit card pitches came up during a bargaining session this week between Southwest and Transport Workers Union Local 556, representing the 15,000 flight attendants at the carrier, according to a summary of the meeting sent to union members.
Southwest, which announces third-quarter earnings Thursday, declined to comment.
The airline is in a dire financial position as it heads into 2021 and is looking for ways to boost revenue and cut costs. That’s why the company recently announced expansion plans to airports such as Chicago O’Hare, Houston Intercontinental, Miami and Palm Springs, Calif., attempts to broaden its revenue base while a large number of passengers are still unwilling to fly.
Losses are expected to be steep once again for Southwest when it announces its third-quarter results. Atlanta-based Delta Air Lines reported a $5.4 billion loss for the quarter and Chicago’s United Airlines lost $1.8 billion. Fort Worth-based American Airlines also reports results Thursday.
Southwest CEO Gary Kelly and other airline executives have said they don’t expect a significant rebound in airline traffic until a COVID-19 vaccine is developed and distributed, which likely wouldn’t happen until late 2021.
Southwest has never slashed pay or furloughed employees in its 50-year history. Kelly said the company is looking at a myriad of options to avoid it, including new ways to make money and cut expenses.
Southwest is the only major airline that doesn’t try to sell credit cards during flights, one of a handful of ways it sets itself apart from other carriers, along with its “bags fly free” and no first-class policies.
Credit card and loyalty programs are a major revenue stream at other airlines. Airlines don’t disclose exactly how much they make from selling credit cards on board, but Southwest said it made $1.3 billion last year from its various credit card programs and agreements with banks.
Selling credit cards during flights often brings in revenue for each new card, as well as potential cash down the line when customers use those credit cards.
In the past, Southwest has turned to other means to sell credit cards than pestering passengers, such as emails and partnerships with country music stars.
However, the airline would need the flight attendants union to sign off on the on-board credit card pitches because they would be the ones actually selling the cards. The topic came up in negotiations for a new contract last year, but those talks have slowed because of the uncertainty of the pandemic.
So far, unions have been icy toward the idea of pay concessions. TWU Local 556 president Lyn Montgomery said that historically, pay cuts haven’t resulted in fewer furloughs at other airlines.
“Now, while flight attendants are serving on the front line of the pandemic, they are doing so with limited opportunities to earn what they had before, while the company is asking for pay concessions that would result in a further reduction to their paychecks,” the union negotiating committee said in its letter to members.
This was originally posted by Dallas Times.