Southwest Airlines has a revenue-based frequent flyer program for both points-earning and redemption.
- The more you spend on a ticket, the more points you earn. And the number of points goes up with the more expensive fare types.
- The cost of an award ticket is tied directly to the price of the ticket. The more expensive the ticket, the more points it costs.
Points currently have a fixed value, more or less, getting you the same amount of value towards any ticket you redeem them for. That is changing. The airline says,
We will also begin to vary our redemption rates across our fare products on some high- and low-demand travel periods.
Southwest has already devalued its points 43% in the past 12 years. Now your points will be worth even less when you want to spend points instead of cash most.
The best uses of frequent flyer miles are when you can get unsold seats that sell for premium prices at a deep discount. When other airlines have business and first class seats going empty, you may get outsized value for your miles.
Not so at Southwest. Your miles might get a little more valuable when ticket prices are cheapest, but they are set to become less valuable when ticket prices are most expensive. One wonders, then, why bother when you can just get a cash back card? The only thing Rapid Rewards will have remaining is its Companion Pass.
And there is literally no reason to do this with a fixed point value program! You’re already spending more points, up to the price of the ticket! This is just a discouragement for displacing new cash bookings when tickets are most expensive, a reduction in value of miles, and pushing off their use into the future.
It’s also a disincentive to accumulate the points in the first place, which means a disincentive to choose Southwest over other carriers. And in that way, it is consistent with all of the other changes like checked bag fees, paid seat assignments and basic economy, that they’ve announced.
There is no reason.
It’s just GREED
Time to say good night and fly another bus that might get you there.
This will destroy their itineraries with connections.
Why fly SWA?
Other than a few routes from ATL my romance with SW is coming to an end.
Question for the commentariat: If “loyalty” programs and their associated “points” completely went away overnight, how less expensive would fares become now that the airlines don’t have to spend on the infrastructure for them?
Given the choice, I’d much rather have straight-up fare pricing without the gimmicks.
2% cash back should always be the plan if you’re a domestic flyer. Not going to do much better.
Southwest needs to identify what areas it will excel to do well. I think it should be one free bag for all. It should pick one or two.
JetBlue: Mint
Alaska: frequent flyer program
Delta: slightly better service
United: international routes and strong international partners except in the UK
Disagree a bit here, Southwest points have always been worth less per point when you need them the most because the flat fees on cash tickets like PFCs do not apply on reward tickets and WN wouldn’t factor those in when determining award ticket pricing, so the net CPP is higher on cheaper WN reward tickets.
Yes, the gap will grow, but it’s been like that for the past decade+.
Whatever. Please just put in domestic first class, and do it soon.
Yup, cancelling WN business card and downgrading personal for just the bag.
No more differentiated product.
Looks like schedule and price is back on the menu boys.
I spent thousands with them despite being a lifetime AA executive platinum Alaska and United Milegage plus guy.They were never my primary airline.However now they are a dead rotting corpse to me like Delta.Thankfully I’m down to a 500 dollar credit with them and I’m done
The only reason I flew them was value and flexibility
Their seats are the most uncomfortable I’ve ever sat on.
In some regards I’m relieved to never fly them again and I always had anxiety with their
I’ve lost all trust in them.
First changing their earnings in Rapid Rewards on previously bought tickets with no advance warning and now the rest of this bloodbath
Truly sad all on all levels
Bottom line? I predict legacy carriers will now eat the majority of their lunch and be more profitable
Southwest RIP along with your former CEO and farewell
Anxiety with their boarding process
Above goof up
@Denver Refugee. No, the loyalty programs are the main asset that many airlines have. American, for example, actually never breaks even flying airplanes and here and there. Their entire profit, and then some, comes from selling miles, primarily to banks. The question isn’t how much cheaper fares would be without loyalty programs – prices are based on supply and demand anyway – but how they would stay in business without their one profitable feature.
I live in Denver- so SWs biggest airport. I fly a lot, but I only fly SW about 4 times a year, which lines up nicely with my credit card boarding position upgrade. But SW is often not the cheapest, especially if you buy early bird. I guess I am going to have to see what the card benefits look like when all the changes are done to see if a few flights a year goes to zero.
Derek – I think they think, like AA, their “point of differentiation” is going to be their network and their schedule. That won’t work in places like Atlanta where they’re giving up, but certainly Texas, Midwest, Atlantic coast and California they have a really strong network and that will be the only thing that sets them apart. But if my choice is between AA and southwest, why wouldn’t I choose AA? I’ve always found their goofy service to be a smidge unprofessional for my liking: though I did appreciate and notice the extra inch or two of legroom.
It’s almost like they are trying to lose my business. Jet Blue, here we come.
This is so sad.
Now Southwest value proposition is all the way to the bottom.
If we cancel a points flight, the points redeposit. If we cancel a cash flight, the airline issues a credit with a 12mo expiration date (another announced change). There’s some added flexibility there which someone might value.
Whether people choose points over cash back for their credit card to me is a velocity question. Especially after considering the devaluations and annual fees, the value might be somewhat low.
What I’ve yet to understand is why people are choosing to fly a connection vs. a nonstop when the price isn’t significantly lower. In other words I don’t see there’s actually a choice when it comes to airlines. One is going to be the cheapest and/or fastest. Sometimes there might be two options. Usually in my experience, there’s only one.
@paul — 100%. It’s Elliott Management’s greed. It’s leadership at SW. They are to blame. Not us consumers or the workers. I feel for the crews that will suffer because of this mismanagement.
@Denver Refugee — Oof. You missed the point (get it?!). @DaveS is right–the airlines make good money off these points programs.
@UnitedEF — If you were referring to airfare, not at all, 2% is weak (5x via Amex Platinum, Citi Prestige is far better). If you instead referring to general non-category domestic spend, you can still do better than 2% cash back. For instance, if you have $100K+ of investments and/or retirement funds at Merrill, I’d go with Bank of America Unlimited Cash Rewards card with the Platinum Honors 75% bonus, which earns 2.62%. That’s better than Citi’s Double Cash and Fidelity, two other no-fee 2% cash back cards. I haven’t tried it, but the US Bank Smartly 4% cash back is technically the highest ‘cash back’ rate of any card product currently available in the US–yet, it requires $100K+ in their savings account, which unfortunately does not have as competitive of rates, so you’d need to spend a lot on the card to make up the difference.
Just cancelled my Southwest card – would rather spend on another card now. The $99 fee is not worth the 6k points and 2 ebc’s. And I made sure to tell Chase this was the reason for cancelling the card. I know it doesn’t make a difference, but it makes me fee better 😛
WN was good when I had young kids and traveled with more stuff. Saved on avg 25% over the next best option. These days we travel with mostly just a carry-on and a personal item. May still stick with WN until they start charging for the carry-on or limit you to one item in the cabin. At that point, other less premium airlines will be on par. Maybe Spirit or Frontier. AA just sucks (small planes and poor service) even if the price isn’t terrible. Delta is wicked expensive for my destinations and any flight that takes 1 to 2 hours on other airlines is 4 to 8 hours due to connecting through one of their hubs. United is somewhere in between, but still on the more pricey side.
This change completely misunderstands the reason airline miles are a big business, not a small one.