I don’t follow Southwest enough to evaluate the claim, but imagine it’s credible.
For Southwest, this makes some sense. I prefer segment and mileage-based programs because they provide more opportunity to benefit disproportionately; my hobby. But a low cost carrier with a low reward frequent traveler program makes some sense, although on the whole I think there are real unexploited opportunities to leverage these programs profitable as major carriers have done (while the ‘legacy’ airlines on the whole haven’t been particularly profitable, their frequent flyer programs have been). Selling miles is profitable, and Southwest doesn’t have nearly as extensive array of partners as major mileage-based programs. Those programs also offer far greater opportunity for mileage sales — one mile per dollar offers from credit cards or other merchants are far easier to implement and more attractive than some fraction of a credit for larger volumes of activity.
What I especially dislike in these sorts of programs is the tendency for revenue-based earning to be coupled with price-based burning. And the value of points on the spending side thus tends to be much lower. I value frequent fliyer miles predominantly for their aspirational value, I can redeem points for the kinds of trips I would otherwise only dream of taking. I don’t view these programs as a substitute for cash back rewards. Turning mileage into cash back with restrictions on the ability to spend points only for travel doesn’t make them more attractive, it undermines the value proposition that makes them so attractive to so many millions of people.
Of course, since Southwest doesn’t offer these types of rewards to begin with, the likely affect is to make the program marginally less attractive for the types of people who read this blog but on the whole the consequences will probably be pretty marginal.
If major carriers went in this direction I think they’d be killing the golden goose. The Global Traveller reports that Emirates is moving to a revenue-based program. But even there it’s fixed-earning based on geographic zones rather than points based on price of ticket, there’s simply more of a differntiation between earning rates for different fare classes. Moving to straight revenue would be a mistake…