Southwest Expands with Icelandair Partnership

Southwest Airlines is in transformation mode, embarking on a reconfiguration mission. From cozying up its seating arrangements with assigned and premium options, to squeezing in a few redeye flights into its packed schedule, this airline is certainly stirring things up.

September 2024 was a pivotal moment for Southwest as it announced a fascinating pivot towards airline partnerships—a significant departure from their traditional business model. Now, we have something new to talk about: the launch of their first official airline partnership.

Southwest & Icelandair: The Interline Partnership Begins

Southwest Airlines is cautiously venturing into the world of airline partnerships. Their aim? To connect travelers to more corners of the globe and boost demand across their network.

Who have they teamed up with first? Icelandair, of all airlines. This partnership is breaking new ground with an interline agreement, starting slowly for now:

• Kicking off in mid-February 2025, the partnership currently targets flights via Baltimore (BWI).
• Expect Denver (DEN) and Nashville (BNA) to jump on the bandwagon soon, though no exact dates are marked on the calendar yet.
• For now, booking these aligned flights happens exclusively on Icelandair’s website, leaving Southwest’s site out of the loop.
• Once Southwest can work out assigned seating, travelers can book itineraries that include both airlines through Southwest directly.
• And on the horizon? Frequent flyer reciprocity—dream big, Rapid Rewards members—where you’ll earn and redeem points across both airlines. But hold your applause; there’s no launch date just yet.

Curious to see this in practice, I hopped over to Icelandair’s site, entering ‘Tampa to Keflavik.’ What do I find? A slew of connecting options, including one through Baltimore with the initial leg courtesy of Southwest.

In essence, this baby-step cooperation allows for easy ticket bookings across the two airlines. We’re not talking about joint ventures or codeshares here, just good old interlining. It’s a big leap for Southwest, historically a lone wolf in the aviation coop.

Before long, we should see more partners join the Southwest family—details are sketchy, but don’t expect them to dive headfirst into any global airline alliances or rub elbows with major US airlines. Clearly, their sights are set on filling long-haul flight quotas.

Perhaps they’ll mimic Alaska Airlines’ pre-oneworld days: a bevy of partnerships with niche long-haul airlines flocking to the West Coast. Airlines like Condor could be contenders, though their overlap with Southwest’s hubs is limited.

Why the fuss? Southwest is enormous but has played a cautious hand in the partnership department—until now. The writing was on the wall when the job posting for a “Senior Manager Airline Partnerships” appeared two years back.

A Chance Meeting of Minds

“We are very excited to have formalized our partnership with Southwest and honored to be chosen as Southwest’s first airline partner. The partnership will open new and exciting connections for our customers onwards with Southwest to numerous destinations in North America, and at the same time, their customers will benefit from our extensive connections to Iceland and Europe. We welcome Southwest to our strong partnership portfolio in the US and ever-growing group of partner airlines and look forward to working together in offering our customers smooth and enjoyable travel experiences.”

“It’s fitting for us to launch this chapter of industry-standard airline partnerships with our longtime friends, Icelandair. Beyond an ability to offer each other’s Customers access to new destinations and like-minded travel experiences centered around hospitality and value, we’re grateful to have been guided by their expertise and best practices in building our program.”

This Isn’t Going to be a Goldmine for Southwest

It’s logical for Southwest to hitch their wagon to some global airlines, but let’s not pop the champagne yet. Will this rescue their bottom line? Color me skeptical.

Revenue splits in these arrangements aren’t particularly generous. For instance, a $500 economy ticket on Icelandair across the Atlantic would barely fill Southwest’s pockets. These partnerships generally divvy up the income based on trip length, so Southwest will likely rake in less per seat than if they managed to sell all their seats independently. But hey, an occupied seat beats an empty one.

And there’s a compatibility issue. Southwest’s fare structure, with two free checked bags across the board, clashes starkly with the often stingy baggage polices elsewhere. How will this fare flexibility reconcile when passengers transit between airlines with starkly different baggage rules?

Bottom Line: A Step Forward, for Sure

This year, Southwest Airlines is embracing the airline partnership game, with Icelandair opening up connections starting in Baltimore (and soon in Denver and Nashville).

Ultimately, it’s a smart move to find more backsides for seats, even if it doesn’t rain money. After all, Southwest’s fares already include plenty more perks than its peers. But as this Val Seny ski resort serves as a delightful journey of new endeavors, Southwest’s venture into partnerships is carving out its own path.

What’s your take on Southwest diving into airline partnerships?