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Southwest Airlines Reveals Payment Systems Prevent Expansion into Canada

Southwest Airlines Reveals Payment Systems Prevent Expansion into Canada
Joe Cortez

With more carriers expanding into Canada, Southwest Airlines says technology is preventing them from adding flights across the United States’ northern border. During their investor update call, leaders for the Dallas-based airline admitted the inability to deal in the Canadian Dollar is holding back further international expansion.

In July 2014, Southwest Airlines became an international carrier when they expanded to three Caribbean cities. Although the airline continues to expand throughout the islands and central America, the carrier has held back from traveling to Canada – and flyers now know why. During the airline’s 2021 first quarter results call for investors, executives admitted technology was the key reason why they have not yet expanded beyond the United States’ northern border.

Foreign Currency and Point of Sale is Key Issue with Canada Flights

When asked by an analyst for J.P. Morgan Chase about adding flights to Canada, Southwest president Tom Nealon admitted that the major issue lies in technology. The carrier’s systems are not prepared to transact business with Canadian buyers.

“So to make Canada work for us, that’s both the business and leisure market, and we’ve got to be able to sell — it’s back to the whole foreign currency, foreign point of sale and we talked about for a long time,” Nealon said during the call, according to a transcript posted by The Motley Fool. “That’s the thing we need to get done.”

Southwest chairman and CEO Gary Kelly was quick to add that it wasn’t so much a technical issue, but a lower-level priority for the airline. As the carrier is successful in doing business with other nations, the carrier is simply not ready to go into the Canadian marketplace.

“We got a lot more [destinations] we’d like to add,” Kelly said. “I don’t know that we would have airplanes. Even if we tackle that technology challenge, I don’t know that we would have airplanes to be able to add those new markets. “

Rapid Rewards Continues to Perform Well Despite Pandemic Lows

During the call, Nealon also noted the airline’s loyalty program continues to perform well despite the losses. Among ancillary products, Rapid Rewards was the biggest contributor to other revenue performance, with only a 22 percent drop in proceeds compared to the first quarter of 2019. Highlights for the program throughout the pandemic include Southwest’s commitment to not take financing against the program and launching a new Companion Pass credit card promotion.

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