After ditching its beloved free baggage policy, introducing basic economy, and installing extra legroom seats across its fleet, Southwest Airlines is taking yet another page out of every other airlines' book: Southwest airport lounges are coming, starting in Honolulu (HNL).
The airline received approval from the Hawaiian airport's governing board earlier this month to turn an approximately 12,000-square-foot space in Terminal 2 into a “Southwest VIP Lounge,” according to public documents. Aviation insider Enilria was first to break the news.
Beyond the size of the space and its location – near the airport's famous outdoor garden space – there are few details about what Southwest is planning for its lounge or when it'll even open. The airline did not immediately respond to a request for comment on its plans.
The lease agreement says Southwest plans to spend a minimum of $20 million on the space and will occupy it for at least five years.
The space was previously occupied by the airport's Garden Conference Center and is nearby the airport's famous outdoor garden space in the courtyard at Terminal 2.
Southwest's lounge plans didn't come out of nowhere. Just last month, CEO Bob Jordan told investors that lounges are what Southwest customers wanted and that opening lounges was a great way to increase credit card and loyalty revenue, too.
But it's not just surprising that its first official lounge will apparently land in Hawaii. After decades of priding itself on democratizing travel with reasonable fares, no surprise fees, and the same generous legroom for all passengers, it's a stunning development that Southwest will open its own airport lounges at all.
The playbook that made Southwest beloved by both passengers and investors alike is no longer working. The airline has been struggling financially in the post-pandemic travel boom, leading an activist investor to force changes that will make them more money … by doing what its competitors are doing. And that means going “premium.”
From new lounges to fancier first class seats, the premium travel boom is undeniable. It's a core piece of why Delta and United are leading the pack. It fuels the credit card signups and record swipe fee revenues where airlines are increasingly making their money. And it's why Southwest is falling behind.
And you can't court “premium” travelers without a lounge.
Case in point: Part of Southwest's motivation for flying to Hawaii in the first place – nonstop service began in 2018 – was to make its loyalty program more attractive and juice credit card signups. Data from the aviation analytics firm Cirium shows that Southwest operates about 1,000 departures from Honolulu every month on its 737 aircraft.
But Jordan, Southwest's CEO, made clear that lounges were a linchpin for taking things further.
“Not just because customers want [lounges], but the lounge access as a card benefit is what allows you to offer a $495, $595-a-year card … because it provides lounge access,” Jordan said. “So it's a huge potential additive to the Rapid Rewards Program.”
At the time, we suspected Southwest would start with one of its most critical airports like Baltimore (BWI), Chicago-Midway (MDW), Denver (DEN), and Dallas-Love Field (DAL). Jordan specifically used Nashville (BNA) as an example where lounges would be attractive to customers.
Starting with Honolulu could indicate that Southwest has even bigger plans to rapidly build out its lounge network.
Bottom Line
Hawaii officials approved a lease application for Southwest to develop and open a Southwest Lounge at Honolulu International Airport (HNL) this month, the airline's first foray into lounges nationwide.
While Southwest officials have been teasing future lounges for months, this is the first official swing at joining the premium airline fray for the traditionally low-cost carrier.
