Southwest’s New (Gutted) Frequent Flyer Program

It’s long been expected that Southwest would be rolling out a new frequent flyer program early in 2011. They’ve been getting fairly stingy as an airline across the board over the past year, they even started enforcing the expiration on their drink chits. I certainly expected the new program to be a gutting of the old one, and it apears to me that’s the case.

Southwest introduced its new fare-based Rapid Rewards program today, moving from a credits system (based on segments flown) to a points system (based on dollars spent, with redemptions based on cost of paid airfare for the flight). Overall they align themselves more with the programs of other ‘low cost carriers’ like JetBlue and Virgin America rather than the mileage programs of major airlines. And while there’s a great deal of marketing hype about offering last seat availability, on the whole and for most customers the program appears to offer less value than before.

In my experience the other low cost carriers view their frequent flyer programs as a tax rather than a profit center, something they’re obliged to offer because everyone else does and something they just want to keep as inexpensive to run as possible. Seems that Southwest has gone the same direction, squeeze out expense and benefits while pretending they’re offering a strong value proposition.

There’s already extensive discussion on Flyertalk. And the basics of the earn/burn structure of the program are as follows:

Base earnings are 6 points per dollar of fare (not including add-on taxes) for Wanna Get Away fares, 10 points per dollar for Anytime fares, and 12 points per dollar for Business Select fares.

Redemption prices are 60 points per dollar of fare (not including tax) for Wanna Get Away fares, 100 points per dollar for Anytime fares, and 120 points per dollar for Business Select fares. All seats are available for redemption, with no blackout dates.

… Points do not expire provided there is earning activity in your account within the preceding 24 months.

If you fly cheap Southwest fares (earning 6 points per dollar) and wanted to redeem those points for a discounted $300 roundtirp fare (at 60 points per dollar), you’d have to spend $3000 to get it. That amounts to a 10% rebate on your airfare.

If you fly cheap Southwest fares (earning 6 points per dollar) and wanted to redeem those points for an Anytime $699 roundtrip fare (at 100 points per dollar), you would have to spend $11,650 before earning enough points to do so. That amounts to a 6% rebate on your airfare.

In contrast, flying $350 trancons with United and redeeming for last seat availability requires less than $4000 in spend.

Less than $2000 for a Saver award, more like an 18% return. You only get there with Southwest if you earn on high business fares and spend on cheap leisure fares. I get that’s the intent of the program, but it’s a darned shame and less valuable than what most traditional frequent flyer programs offer.

It’s also far more complex than a straightforward mileage system that consumers already ‘get’ and more complex than a credits system based on flights flown. How many customers can do the math without Excel?

Southwest’s ‘elite status’ is being revamped, 25 one-way trips gets you priority standby and a 25% bonus on points earn from your flights. They’ve added an upper tier which requires 50 one-way trips which gets you free Wi-Fi where available and a 100% points bonus.

One of the popular features of the program in the past has been “Companion Pass,” you get to take someone along free when you travel, and that more or less continues.

Of course Southwest doesn’t get you any meaningful option of premium cabin international travel. Now, the new program does offer redemptions on other carriers, if you’re a co-branded credit card holder Southwest will buy you a ticket on another airline. And you won’t do better than a 1% rebate that can be spent towards paid travel with the credit card, unlike at least Capital One cards offering ‘double points’ and thus up to 2% rebate on travel (a good cash back card is still superior, but it’s nonetheless illustrative to point out that travel on other airlines via this program is actually a worse deal than you even get through Capital One!).

This program holds zero appeal for me.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I agree that it is a bit complex – based on the different earning rates for different fare types – but is that really much different than most legacy programs with different earning rates on different partners, in different classes of service and variable based on operating or marketing carrier? Folks are pretty good at understanding points converting straight to dollar amounts rather than arbitrary redemption levels.

    I still think the new RR2.0 program is going to be horrible for anyone other than folks always flying BS fares on someone else’s dime, but that doesn’t make it confusing.

    http://boardingarea.com/thewanderingaramean/2011/01/southwest-launches-new-rapid-rewards-program/

  2. They make it sound like it’s great but the reality is that it is much more difficult to get a free flight that the original. Under the old system, 16 flights earn you an award for a free round trip flight. Now, the number is much more complicated but worse. For example, you’ll need to book 20 $100 “wanna get away” trips to earn a round trip “wanna get away” worth $200. Effectively it got 25% harder to get a round trip ticket. That’s not the worst part. Those of us who are close to the 16 credits under the old system get really screwed. We’ll need to convert 1200 points under the new system to equal one credit under the old. So if you have 12 credits under the old system, you would only need to fly 4 more times. Now, you would need to buy 8 trips at $100 “wanna get away” to get the remaining 4 credits for the round trip. They make it sound like this is a good thing, but read the fine print this is bad news.

  3. This is worse for the typical Southwest flyer who earned awards in the past. It is very bad for people who took $100 short hop flights frequently as they will go from 8 of those flights earning a long distance flight to 10 of those flights earning a short hop. It could break even for people who take a fair amount of high dollar last minute business flights. It will be an improvement for infrequent flyers who don’t normally earn awards as southwest was the worst for these flyers before but could be the best now. One $600 anytime flight on company business will earn enough points for one $100 short hop get away flight, so for example if you had to take a last minute business trip from Houston to Pittsburgh for $600 at 10 points per dollar, you could immediately get 6000 points and cash in for a weekend get away $100 trip at 60 points per dollar from Houston to New Orleans the next month. One domestic flight earning enough points to redeem for another domestic flight is not going to happen with other programs. So the low minimum redemption level is a good bonus for infrequent flyers.

  4. The earning / redemption math with fares, points etc is unnecessarily complicated, but when you strip out all of that, it comes down to a 10% rebate, right? And better than that if you reach elite status.

    This will create winners and losers, but I don’t think on the face of it a 10% rebate is awful. I’m curious how that compares to Jetblue and Virgin America?

    Of course it’s a different mentality for people used to earning miles, and they would have to shift their thinking, but Southwest was never in that game in the first place.

  5. I have analyzed this new program extensively since it came out. It is not to be dismissed out of hand, as there will be many angles to play.

    If you have use for a Companion Pass, you are best off using the Starwood Amex card and transferring the whole load once every 2 years in January, as WN has moved to a “rest of the current year and all of next year” qualifying system. EXTREME return on your SPG points, so much so that it’s impossible to believe it can hold.

    If you can get to a CP this calendar year, do it, as it will be good until 12/31/12. Don’t use the new WN Visa except maybe for partners, or unless you need some TQPs for elite.

    Top WN elites who fly expensive buckets will see an increase in their return (relative to RR 1.0) of as much as several hundred percent.

    Guys on $19 LAX-LAS flights, not so much. They might as well ignore RR 2.0, except for the Elite benefits.

    For those of us in the middle of the country, whose flights tend to be shorter and cheaper, it might well work out better.

    It’s nice that Awards will now be obtained at the time of the flyer’s choice, rather than automatically, as sometimes they pile up.

    I am sure there will be plenty of “double points” offers and such.

    I covered the basics at ingy’s blog.

  6. As a very frequent flyer of SW, this is a horrible program. Based on dollars, if you are on a trip and want to extend a trip, say the day before you are scheduled to go back, you have to buy a fare (in points) that can cost up to 4x the amount you originally paid. This penalizes the flyer that used to have the freedom to change his flight at the last minute.

    Because of this, I will not be a loyal flyer on SW airlines anymore. I will go to another airline now, whichever is more convenient. I used to fly ONLY with SW. Times have changed both ways!

  7. DOES NOT SOUND ANYTHING LIKE THE PREVIOUS PROGRAM THAT SOUTHWEST HAD AND THAT PEOPLE LIKED VERY MUCH. SOUNDS HARD TO GET ENOUGH MILES TO DO ANYTHING IF YOU’RE A LEISURE TRAVELER.

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