Effective immediately and without notice, Southwest Airlines has started requiring 6.5% more points for flight redemptions. The change comes as Southwest celebrates its 50th anniversary this week.
The Rapid Rewards program only just set new point values in 2018, making all redemptions cost the same number of points per dollar ticket cost whether it’s a ‘Wanna Get Away’ fare, Anytime, or Business Select ticket. With some occasional slight variation, a ticket cost 78 Rapid Rewards points per dollar of base fare. That was a big reduction in cost of Anytime and Business Select tickets, but an 8% increase for the cheapest fares that people tried to redeem for.
Now redemptions appear to cost 83 points per dollar of base fare, a 6.5% increase, a change first reported by Zach Honig.
That means each Southwest Rapid Rewards point gets you gets you about 1.2 cents apiece in base fare, or 1.35 cents apiece in ticket cost when you factor the taxes saved as well (award tickets don’t pay passenger facility charges, domestic excise taxes, or segment taxes but do incur security fees).
Since Southwest redemptions are tied directly to the price of a ticket, there’s no legitimate reason to devalue the currency. When air travel demand is high, award prices go up automatically. When demand is low, award prices fall. This model even accounts for inflation, since that alone pushes up redemption prices as it raises ticket prices. And the Rapid Rewards program is getting money for each point to cover those redemptions.
During the pandemic people have kept earning points on their co-brand credit card, in anticipation of using those points when they’re able to travel. Just as travel begins to pick up, the goal posts get moved slightly.
Last year the airline allowed customers to convert travel credits from unused tickets into points. Many members had credits from trips they’d cancelled due to the pandemic. This seemed like a good deal. Customers were given the same purchasing power in points that they had in cash, plus points don’t expire and can be used for someone other than the original traveler (but tickets purchased with points don’t earn points or elite status credit). Now the value of those pandemic travel vouchers, converted to points, have been devalued because they purchase 6.5% less travel.