The news: Southwest travelers booking flights can use Klarna to pay for their flights in full, in four interest-free installments, or with longer interest-bearing loans, per a press release.

Why this matters: Klarna is trying to reach more shoppers in a broader array of industries. Southwest controls 17% of the domestic travel market, trailing American and Delta by less than a percentage point, per the Bureau of Transportation. 

This positions Klarna to finance travel for middle-income travelers who no longer have the option to book flights on discount carrier Spirit Airlines post-bankruptcy. 

Zoom out: Southwest is widening its payment offerings.

• It launched a debit rewards card with Galileo and Sunrise Bank last October.
• It also has BNPL partnerships with Sezzle and FlexPay.

Southwest is connecting with passengers who don’t use premium travel cards for their spending and instead favor debit and BNPL.

Implications for travel brands: As the K-shaped economy widens, travel spending likely will split into two groups. Affluent travelers will try to maximize their credit card rewards from their premium cards, and lower-income travelers will reach for budget-friendly tools to make travel possible. 

For carriers most likely to pick up Spirit’s old clientele, leaning into debit and BNPL offerings can help these travelers finance their flights: 33% of US travelers said rising airfare costs were making them travel less, per a YouGov survey commissioned by The Points Guy.

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