Southwest's new Trip Protection
Apr 28, 2010, 8:00 am
#1
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Southwest's new Trip Protection
http://www.blogsouthwest.com/blog/ne...s-southwestcom
http://www.southwest.com/programs_se...rotection.html
Though there's probably more for this thread to discuss about this new product, in particular, I wonder whether it applies to close-in flight changes on Southwest at the customer's initiative for whatever reason. Or, if so, for what reasons.
Our principal remedy for not catching the flight we've booked is basically different with Southwest than with most other carriers -- often cited as one of Southwest's best advantages over other airlines. With other carriers, we're out a minimum of $150 for changing the flight, or we're out the whole thing, if it's not the airline's fault that we didn't catch it. Trip insurance covers this.
But with Southwest, our air fare goes into TTF, and/or we can make close-in changes for the add-collect up to the existing fare at the time of the change. The question: Does the Trip Protection cover this?
The answer is probably "No". So, ironically, the insurance only covers non-airline-related losses?
Obviously, my posting this thread stems from me not being clear about what is covered, even reading the FAQ, and the off-chance that I may not be unique.
Tip of the hat to ftnoob for leading me to this via his thread, http://www.flyertalk.com/forum/south...hancement.html
http://www.southwest.com/programs_se...rotection.html
Though there's probably more for this thread to discuss about this new product, in particular, I wonder whether it applies to close-in flight changes on Southwest at the customer's initiative for whatever reason. Or, if so, for what reasons.
Our principal remedy for not catching the flight we've booked is basically different with Southwest than with most other carriers -- often cited as one of Southwest's best advantages over other airlines. With other carriers, we're out a minimum of $150 for changing the flight, or we're out the whole thing, if it's not the airline's fault that we didn't catch it. Trip insurance covers this.
But with Southwest, our air fare goes into TTF, and/or we can make close-in changes for the add-collect up to the existing fare at the time of the change. The question: Does the Trip Protection cover this?
The answer is probably "No". So, ironically, the insurance only covers non-airline-related losses?
Obviously, my posting this thread stems from me not being clear about what is covered, even reading the FAQ, and the off-chance that I may not be unique.
Tip of the hat to ftnoob for leading me to this via his thread, http://www.flyertalk.com/forum/south...hancement.html
May 17, 2010, 12:55 am
#2
Moderator, Southwest Airlines and Choice Privileges
Join Date: Mar 2008
Location: Central Texas
Posts: 3,038
I had looked for answers to most of Firewind's questions before he even asked them, with little success. The only thing apparent at the time was that there would be no coverage for "changed my mind" type itinerary changes.
Just moments ago I received for the first time the option to add trip insurance (and EBCI) at the time of ticket purchase. From the trip insurance portion of the purchase page I was able to view new info pages that spell out rules for one way (including custom connections using all three city fields) and round-trip purchases.
The answer to the big question ("what happens with my TTF?") is that the funds are forfeited.
Here are the basic coverage categories:
Just moments ago I received for the first time the option to add trip insurance (and EBCI) at the time of ticket purchase. From the trip insurance portion of the purchase page I was able to view new info pages that spell out rules for one way (including custom connections using all three city fields) and round-trip purchases.
The answer to the big question ("what happens with my TTF?") is that the funds are forfeited.
Here are the basic coverage categories:
- Trip Cancellation/Interruption
- Baggage Loss or Damage
- Baggage Delay
- Existing Medical Condition Included
- 24-hour Assistance
May 17, 2010, 10:48 am
#3
Join Date: Feb 2004
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It's disappointing to see Southwest sell insurance products. I know people who fall for the Rental Car insurance/prepaid fuel profit makers, so they'll likely consider this too thinking "hey it's only $20". *BUT* if this program leads to lower fares for Savvy FTers like us, then I'm all for it!!
My opinion is that this insurance has infrequent payout triggers that it must be huge profit for Southwest and the Insurer. In fact, since the insurer retains use of the ticketless travel funds from any un-flown trips, and surely retains the baggage compensation from Southwest if a bag claim is paid, there is much less risk than with other carriers. The insurer could re-use funds to rebook passengers as needed, but more likely has an agreement to redeem/reselll the ticketless travel funds back to Southwest.
Southwest already does a great job of meeting the majority of what this insurance covers, all on its own. Reuse funds for a year is as good as refundable for most folks. Trip changes without a difference in fare have been honored by corporate supervisors if they verify a death in the family with a funeral home, etc. Southwest already seems to deal with baggage claims fairly judging by the lack of complaints on FT (but they won't pay for electronics, and this insurance does do that).
Here are some hypothetical #s. 100% made up
Trip cancellation 5 in 50,000 tickets sold. $250 per claim
Trip interruption 5 in 50,000 tickets sold $250 per claim
Baggage Loss 2in 50,000 tickets sold $250 per claim
Baggage Damage 2 in 50,000 tickets sold $250 per claim
Baggage Delay 10 in 50,000 tickets sold $100 per claim
Lodging for trip interruption 2 in 50,000 tickets $250 per claim
Total premium charged $1 million
Total claims paid out $5000
Total payout 1/2 of 1%
It's also likely that only half the eligible claims would even be filed or paid, because not everyone will follow through with all the claims paperwork, documentation from hospitals/doctors/receipts for everything in their baggage, etc.
Assuming these made up figures are off by 10x, then the total payout is 5%. In contrast, many auto insurance companies pay ~50% out as claims
My opinion is that this insurance has infrequent payout triggers that it must be huge profit for Southwest and the Insurer. In fact, since the insurer retains use of the ticketless travel funds from any un-flown trips, and surely retains the baggage compensation from Southwest if a bag claim is paid, there is much less risk than with other carriers. The insurer could re-use funds to rebook passengers as needed, but more likely has an agreement to redeem/reselll the ticketless travel funds back to Southwest.
Southwest already does a great job of meeting the majority of what this insurance covers, all on its own. Reuse funds for a year is as good as refundable for most folks. Trip changes without a difference in fare have been honored by corporate supervisors if they verify a death in the family with a funeral home, etc. Southwest already seems to deal with baggage claims fairly judging by the lack of complaints on FT (but they won't pay for electronics, and this insurance does do that).
Here are some hypothetical #s. 100% made up
Trip cancellation 5 in 50,000 tickets sold. $250 per claim
Trip interruption 5 in 50,000 tickets sold $250 per claim
Baggage Loss 2in 50,000 tickets sold $250 per claim
Baggage Damage 2 in 50,000 tickets sold $250 per claim
Baggage Delay 10 in 50,000 tickets sold $100 per claim
Lodging for trip interruption 2 in 50,000 tickets $250 per claim
Total premium charged $1 million
Total claims paid out $5000
Total payout 1/2 of 1%
It's also likely that only half the eligible claims would even be filed or paid, because not everyone will follow through with all the claims paperwork, documentation from hospitals/doctors/receipts for everything in their baggage, etc.
Assuming these made up figures are off by 10x, then the total payout is 5%. In contrast, many auto insurance companies pay ~50% out as claims
Last edited by expert7700; May 17, 2010 at 11:19 am
May 17, 2010, 1:06 pm
#4
Moderator, Southwest Airlines and Choice Privileges
Join Date: Mar 2008
Location: Central Texas
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This is a rare case where I disagree with expert7700. I never posted my own list of ideas on the revenue enhancement suggestion thread, but trip insurance was on my list. It's a common offering on other airlines, Priceline, Hotwire, and even concert/sporting ticket outlets.
To pull up one example from the archives, what coverage does Southwest provide in cases like this:
Does SWA help you out if you lose your job? If you have to cancel because the distant family member you were planning to visit became seriously ill? Have you ever known SWA to cover hospital bills for one of its passengers? I only looked at a detailed policy for one state (CA) and couldn't tell whether medical evac is covered or not, but that is a common feature of trip insurance, and the cost is likely a minimum of multiple tens of thousands of dollars. (The overall coverage limit for a single passenger is $500,000 for the CA policy.) Your analysis needs to be expanded to include cases where there is a mega payout; they are rare but an important reason to have travel insurance in appropriate circumstances. Critics of trip insurance often overlook the benefit of protection against catastrophic expenses that could bankrupt the insurance purchaser.
Another thing to consider is that for many SWA customers, TTF reuse is irrelevant. They book the annual (or every two, three, or five year) family vacation four to six months in advance of the flight. If they are forced to change their plans they may get no benefit from the TTF because they cannot reschedule by the time the funds expire. Even if they can reschedule within 18 months of original purchase, $20 for RT trip coverage is less than $50 for funds extension.
Now would I recommend to a friend or relative that they purchase the SWA-sourced offering? Only as a backup. I'd send them to squaremouth.com first. But for $20 cost RT, some people aren't going to want to bother with researching three dozen different travel insurance policies to be sure they are getting the best deal. It just makes (dollars and) sense for SWA to take advantage of this "convenience" profit opportunity.
I have 4 one-way SWA RR seats booked for Portland/Oregon (PDX) to Tampa/Florida (TPA) on 6/14, Flight #272 (6:15am-3:55pm). My cruise out of Tampa is being rebooked to be out of Miami so I now need to fly into Ft. Lauderdale instead and I now need the morning flight (Flight #272/236, 6:15am-4:40pm).
Another thing to consider is that for many SWA customers, TTF reuse is irrelevant. They book the annual (or every two, three, or five year) family vacation four to six months in advance of the flight. If they are forced to change their plans they may get no benefit from the TTF because they cannot reschedule by the time the funds expire. Even if they can reschedule within 18 months of original purchase, $20 for RT trip coverage is less than $50 for funds extension.
Now would I recommend to a friend or relative that they purchase the SWA-sourced offering? Only as a backup. I'd send them to squaremouth.com first. But for $20 cost RT, some people aren't going to want to bother with researching three dozen different travel insurance policies to be sure they are getting the best deal. It just makes (dollars and) sense for SWA to take advantage of this "convenience" profit opportunity.
May 18, 2010, 9:14 am
#5
Join Date: Feb 2004
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ftnoob, thanks for continuing the discussion. My thoughts and #s above were extremes, based largely on my idea of business travellers, and one state's $500 policy limits. I was also thinking about alot of FTers and business travellers who already are comfortable reusing TTF etc.
As you noted, my original post lacked examples of who should buy the insurance. Unlike life insurance, the highest risk class does not pay any extra. It's very true that some categories can benefit:
1) Maybe they book travel once every year or two, without having to worry how in the world they will re-use the funds when the only reaon they were booking was because they have an amazing cruise deal, or family event.
2) Maybe they book some crazy cheap coast-to-coast trips for $109 round trip during deep fare sales etc. Since full fare for that trip normally runs $850, this seems like it would be one way to lock-in the ability to get home from your trip. While Southwest HAS helped out rebooking an earlier or later return in extreme cases such as a funeral, they may not be as flexible in cases like when you have an entire family of 5 who stayed a few days late because one had to be kept for observation, or was out of the hospital but wasn't cleared to fly by their doctor.
3) A small % of passsengers who are 'on the fence' about the trip and worrying whether to book or not might decide to book travel. Sometimes it's just one thing that makes them decide it'll be ok however it works out.
In aggregate, I'm still sure this is still a big potential profit center for the insurance carrier and WN, however I can agree that it was something that at least some passengers have asked for.... Or regretted not having been offered after they have incurred substantial fees.
One fear I do have, is that this program makes it one step easier for Southwest to remove a perk such as TTF Reuse for discount fare classes. If Southwest were to modify their policies, they could point to the travel partner program and put a media spin on it, saying we've IMPROVED our program because now you don't get just re-use, you get a full refund (fine print: if you spend $20 extra per person for the insurance, and you meet their terms and conditions to a t).
As you noted, my original post lacked examples of who should buy the insurance. Unlike life insurance, the highest risk class does not pay any extra. It's very true that some categories can benefit:
1) Maybe they book travel once every year or two, without having to worry how in the world they will re-use the funds when the only reaon they were booking was because they have an amazing cruise deal, or family event.
2) Maybe they book some crazy cheap coast-to-coast trips for $109 round trip during deep fare sales etc. Since full fare for that trip normally runs $850, this seems like it would be one way to lock-in the ability to get home from your trip. While Southwest HAS helped out rebooking an earlier or later return in extreme cases such as a funeral, they may not be as flexible in cases like when you have an entire family of 5 who stayed a few days late because one had to be kept for observation, or was out of the hospital but wasn't cleared to fly by their doctor.
3) A small % of passsengers who are 'on the fence' about the trip and worrying whether to book or not might decide to book travel. Sometimes it's just one thing that makes them decide it'll be ok however it works out.
In aggregate, I'm still sure this is still a big potential profit center for the insurance carrier and WN, however I can agree that it was something that at least some passengers have asked for.... Or regretted not having been offered after they have incurred substantial fees.
One fear I do have, is that this program makes it one step easier for Southwest to remove a perk such as TTF Reuse for discount fare classes. If Southwest were to modify their policies, they could point to the travel partner program and put a media spin on it, saying we've IMPROVED our program because now you don't get just re-use, you get a full refund (fine print: if you spend $20 extra per person for the insurance, and you meet their terms and conditions to a t).
Last edited by expert7700; May 18, 2010 at 9:53 am
May 18, 2010, 9:23 am
#6
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IMHO, Southwest has made a mistake here. Every savvy consumer knows that travel insurance is grossly overpriced, even more so than the loss damage waivers that car rental companies promote.
Southwest's brand image is one of value: a good product at a fair price. That's why gouge fares are never seen, not even on monopoly routes.
Offering an upsell that is widely known to be a poor value tarnishes Southwest's brand identity. I believe this damage outweighs any revenue benefit. I have no quarrel with ancillary revenue, but it needs to be a good value for the extra money. Just my opinion.
If Southwest wanted to repair this particular problem, it could offer a 75% discount on trip insurance for members of Rapid Rewards. People would take the time to sign up for RR and probably they would be more likely to book Southwest for their next trip too.
Southwest's brand image is one of value: a good product at a fair price. That's why gouge fares are never seen, not even on monopoly routes.
Offering an upsell that is widely known to be a poor value tarnishes Southwest's brand identity. I believe this damage outweighs any revenue benefit. I have no quarrel with ancillary revenue, but it needs to be a good value for the extra money. Just my opinion.
If Southwest wanted to repair this particular problem, it could offer a 75% discount on trip insurance for members of Rapid Rewards. People would take the time to sign up for RR and probably they would be more likely to book Southwest for their next trip too.
May 18, 2010, 9:40 am
#7
Join Date: Feb 2004
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It's not a sleazy add on like selling peanuts or aisle seats for a premium, but it's still an add-on. It could be worse too--at least they are not offering a magicjack VOIP system, or a Fleece blanket.
Maybe at least RR customers can have an opt-out in their profile? So those who dismiss the idea of buying it don't have to see logos and offers during booking?
-Tim
Last edited by expert7700; May 18, 2010 at 9:52 am
May 18, 2010, 7:19 pm
#8
Join Date: Apr 2007
Location: PVD
Programs: Rapid Rewards, WorldPerks
Posts: 465
I don't have a problem with this. I'll never buy it (always do for cruises though), but I don't think it's a big issue. Note how you have to say no to travel insurance when booking with US, but it is an option on WN's site. Big difference.
May 18, 2010, 8:51 pm
#9
Join Date: Mar 2003
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Posts: 1,473
Insurance is for the very rare event that can bankrupt you. It almost never makes sense to pay for insurance for a much more common event that costs less than a month's salary. You're much better off taking those risks yourself.
And yes, it's disappointing that WN would promote this.
And yes, it's disappointing that WN would promote this.
May 15, 2011, 1:18 pm
#10
Join Date: Dec 2005
Posts: 933
Does Southwest offer flight cancellation insurance?
Greetings,
I just bought 2 tickets for travel in August. After completing the process, I realize I was not offered travel insurance. I could have swore that when I bought my tickets for travel back in March, I was offered travel insurance. Then again, maybe I am rolling everything together (ie. other airlines, hotels, cars, etc). So, does WN offer travel insurance?
I just bought 2 tickets for travel in August. After completing the process, I realize I was not offered travel insurance. I could have swore that when I bought my tickets for travel back in March, I was offered travel insurance. Then again, maybe I am rolling everything together (ie. other airlines, hotels, cars, etc). So, does WN offer travel insurance?
May 15, 2011, 11:30 pm
#13
Moderator, Southwest Airlines and Choice Privileges
Join Date: Mar 2008
Location: Central Texas
Posts: 3,038
For a very brief time, trip insurance was something that could be included in your travel "shopping cart." The links in the OP are dead, but the links to the pricing pages in the 2nd post are still live. From Google's cache you can still view some customer's in-process purchase page wherein there was still trip insurance information in the page source. In fact if you initiate a purchase today, in the HTML source for the Price page you can still view the code for the Trip Protection section of the shopping cart. This is what it looks like if you unhide it:
Clicking the Modify link, however, just takes you to the Purchase page.
It might seem hard to believe now, but during this thread's original life just one year ago, this forum was 99% cheerleaders. I strongly felt that the critical posts above were very misguided. I say that as a person who formerly thought exactly the same way as the naysayers. My old badly misinformed opinions were based on the image of travel insurance kiosks in airports preying on the fears of white-knuckle travelers. Travel insurance at one time may have been a ripoff in all cases, and in some cases today it still is. But now we have the WWW and great sites like squaremouth.com where you can find good trip insurance values when it makes sense to buy it.
About a month after this thread originally died I came across an article on nytimes.com that should be required reading for those who think travel insurance is always an over priced ripoff. I didn't bother to post it due to the "this is wrong for angelic swa" mindset that was so dominant here. Consider that since this time last year we've had fiascos like the drink coupon policy change, the lies that "the CoC always prohibited TTF transfers," the "mechanical breakdowns are an act of God" mess, missteps like A/CP qualification rule change shaft jobs, and expired award reissuance rule changes causing untold numbers of award to vanish overnight.
Who still believes SWA is "too good" to offer trip insurance?
I still maintain it was a good idea for revenue enhancement.
And now with RR 2.0, you need to think about buying trip insurance when traveling on points!
Clicking the Modify link, however, just takes you to the Purchase page.
It might seem hard to believe now, but during this thread's original life just one year ago, this forum was 99% cheerleaders. I strongly felt that the critical posts above were very misguided. I say that as a person who formerly thought exactly the same way as the naysayers. My old badly misinformed opinions were based on the image of travel insurance kiosks in airports preying on the fears of white-knuckle travelers. Travel insurance at one time may have been a ripoff in all cases, and in some cases today it still is. But now we have the WWW and great sites like squaremouth.com where you can find good trip insurance values when it makes sense to buy it.
About a month after this thread originally died I came across an article on nytimes.com that should be required reading for those who think travel insurance is always an over priced ripoff. I didn't bother to post it due to the "this is wrong for angelic swa" mindset that was so dominant here. Consider that since this time last year we've had fiascos like the drink coupon policy change, the lies that "the CoC always prohibited TTF transfers," the "mechanical breakdowns are an act of God" mess, missteps like A/CP qualification rule change shaft jobs, and expired award reissuance rule changes causing untold numbers of award to vanish overnight.
Who still believes SWA is "too good" to offer trip insurance?
I still maintain it was a good idea for revenue enhancement.
And now with RR 2.0, you need to think about buying trip insurance when traveling on points!
May 16, 2011, 7:13 am
#14
Join Date: Dec 2005
Posts: 933
Hey, one never knows what might happen. As a matter of fact, I was one never to purchase travel insurance. That said, I started 2 years ago. Thank goodness I did because I developed a serious medical condition so I couldn't go on our cruise. I submitted the paperwork and received my refund, minus the cost of the insurance, within 2 weeks.
That said, I bought tickets on Sunday morning for travel in August. The 2 tickets priced out to $618. I then added my $130 worth of credit thus bringing the price down. The only disappointing thing is that my tickets expire in November. Not the $130 credit, the whole friggin ticket! I will be calling SWA today to find out why it is not for a year like my previous purchases.
That said, I bought tickets on Sunday morning for travel in August. The 2 tickets priced out to $618. I then added my $130 worth of credit thus bringing the price down. The only disappointing thing is that my tickets expire in November. Not the $130 credit, the whole friggin ticket! I will be calling SWA today to find out why it is not for a year like my previous purchases.
May 16, 2011, 9:15 am
#15
Join Date: Aug 2004
Location: PBI
Programs: DL GM, CO, SWA
Posts: 391
Hey, one never knows what might happen. As a matter of fact, I was one never to purchase travel insurance. That said, I started 2 years ago. Thank goodness I did because I developed a serious medical condition so I couldn't go on our cruise. I submitted the paperwork and received my refund, minus the cost of the insurance, within 2 weeks.
That said, I bought tickets on Sunday morning for travel in August. The 2 tickets priced out to $618. I then added my $130 worth of credit thus bringing the price down. The only disappointing thing is that my tickets expire in November. Not the $130 credit, the whole friggin ticket! I will be calling SWA today to find out why it is not for a year like my previous purchases.
That said, I bought tickets on Sunday morning for travel in August. The 2 tickets priced out to $618. I then added my $130 worth of credit thus bringing the price down. The only disappointing thing is that my tickets expire in November. Not the $130 credit, the whole friggin ticket! I will be calling SWA today to find out why it is not for a year like my previous purchases.
But back to trip insurance on SWA: I get that it's worth it for a cruise or an expensive package trip but I'm curious about the advantages of SWA trip insurance, being that you can TTF it.