Southwest has long been the best points program for domestic travel for many of us. I’ve written about them before, but many people still don’t make the most of the potential of Southwest points. There was a Southwest devaluation from ~1.7 cents to ~1.5 cents in 2013, and then in February they announced another revaluation. Here’s what you should be doing with any Southwest points this week as well as in the future, and a prediction that I’d say has a solid 2.222222% chance of being correct!
The announcement from Southwest
We created Rapid Rewards® because we think you deserve to actually feel rewarded. And, from time to time we must make some updates to our program. Beginning April 17, 2015, the number of Rapid Rewards Points needed to redeem for certain flights will vary based on destination, time, day of travel, demand, fare class, and other factors. However, there are still many flights which will stay at the current redemption rate. And don’t forget that when fares go on sale, so do the points needed for redeeming for a reward flight on those fares.
As an active Rapid Rewards® Member, you know first-hand about the great benefits of our frequent flyer program including:
- Unlimited reward seats
- No blackout dates
- Points that don’t expire
You may also know that we’re all about creating flexibility for you to use your Rapid Rewards Points:
- We don’t charge a fee of any kind if you wish to change or cancel your reward flight at any point.
- We don’t charge a fee of any kind for you to use your points, even if you are redeeming at the last minute.
- And, there is no minimum point balance requirement to redeem for reward travel.
One thing we’ll never change is our continued goal to bring you the best rewards program in the business.
Thank you for your business and continued loyalty.
Reading between the lines
There have been a wide variety of predictions on how this is going to play out, so I thought it was time for a new one:
Southwest will make no change except a floor on the number of points required as follows:
- minimum 4,000 points per one-way domestic ticket.
- minimum 10,000 points per one-way domestic ticket on a few published peak dates.
- minimum 10,000 points per one-way international, Alaska or Hawaii ticket.
- minimum 18,000 points per one-way international, Alaska or Hawaii ticket on a few published peak dates.
I’m also predicting Southwest service to Hawaii and Alaska as well as seasonal nonstop service from Houston to Cusco. Why limit yourself once you start making stuff up?!!
What you should do
is no different than what you should always do with all Southwest points: book travel with them as soon as you get them! Let’s walk through a couple of scenarios and see why:
Scenario 1: a single traveler from the Bay Area who likes to head to Las Vegas for a day or two once in a while, and to Cabo when he’s looking for some warmer weather.
Currently, if he books well in advance using all of his Southwest points, he gets the best possible prices on these trips, at as little as 3,242 points roundtrip to Las Vegas, up to 10,500 points to Las Vegas for a Friday-Sunday trip, and around 20,000-22,000 points per Cabo trip.
If he makes the silly mistake of not realizing the value of Southwest’s change and cancellation policies, he might wait until he’s sure about each trip before booking and then pay significantly more. Let’s assume he has no use for a companion pass or a Southwest card and sees Southwest transfers as an ok (at best) use of his Chase Ultimate Rewards points. Conventional wisdom says ‘keep them flexible, and transfer when you’re ready to book’. I say nonsense! Transfer enough for 4 or 5 trips, book 4 or 5 trips in advance (even though he knows he’ll only use one or two of those specific dates), and kick his trips down the road as he’s able to make firm plans. It is free. Costs absolutely nothing, takes seconds, and by tying up 50K or 60K Ultimate Rewards points (the amount he can easily earn during one weeklong office supply prepaid card sale) he greatly increases his flexibility and the value of all of the points he might use for domestic trips!
This traveler is going to hate the 4,000 point ticket that used to cost 1,621 points, but he’ll see no effect otherwise. At the end of the day, it might cost him an extra 20,000 or 30,000 points per year but he’ll still be well ahead of where he’d be consistently using any other program for domestic travel. He’ll probably use Avios a little more often as the extremely cheap Southwest points tickets up and down the West coast will be gone.
Scenario 2: is a couple a few years older than us. They live in Texas and have two kids, both out of state in College. Of course the kids are nowhere near each other. They have a companion pass and the 110,000 points it took to earn that pass. The kids can drive 8-10 hours to get home, or they can drive 8-10 hours to visit the kids, but neither is very much fun – they’ve tried! So, instead, they keep all of their points tied up in tickets at all times, both for themselves using the companion pass and for their kids to return home for the odd weekend or holiday. Again, they often wait until a few days before scheduled travel to decide whether or not to travel, and then change their tickets by a couple months each time a trip doesn’t work out. The new price floors will cost them a few points, but not enough to make a difference. They’ll continue to collect Southwest points as it’s the only program that currently interests them. Besides, two credit cards is two more than they would like to have.
Scenario 3: is our family – 4 passengers with 2 companion passes. We know when we can travel, the school district tells us a year or more in advance! So we keep our Southwest points tied up at all times, frequently booking two totally different trips for the same weekend. Currently we have flights to both Atlanta (and then driving to Savannah, GA) and San Diego for Labor Day weekend. By consistently booking early when Southwest prices are low, we can wait for other deals like AA reduced price awards or available seats with Avios to open up while catching the lowest possible prices for peak times. The new price floors are going to make us look at rebooking some trips with other programs, but won’t change our outlook on Southwest. The only destination getting significantly more expensive will be Mexico City.
What you should do, this week and beyond
Book travel with any and all Southwest points you have! Choose the trips you’re most likely to be able to keep, book to as many different places as you like for peak travel times to keep your prices low, and change or cancel your tickets every time you feel like it. Even if you forget to cancel or change a ticket and don’t show up, you’ll get your points back and the $11.20 per domestic roundtrip ticket will be available to be used on another ticket.
Travel booked with Southwest points is worth more than travel booked with cash or other flexible points!
Occasionally I read that Southwest travel, once a companion pass is earned, should be booked with Arrival points or some other cashback program as that will require less spending and/or opportunity cost. However, the people suggesting this must either (1) never change plans, (2) have very little use for Southwest routes due to their limited service area, or (3) be willing to tie up a lot of money in tickets that may not be used, and risk having funds from refunded tickets expire as they do one year after booking.
You heard it here first! Southwest will be flying to Peru, Alaska and Hawaii by summer of 2016. The new valuation will remain at 70 points per base fare dollar but add minimum prices that will make some routes and dates much more expensive. Southwest points are awesome because they’re so flexible, and you shouldn’t have any in your account by Thursday night. Guaranteed to be mostly nonsense, except for the booking advise!
I like this approach. This is now on my to do list for this week.
I thought you had to cancel at least 10 minutes prior for a refund. Does that not apply to flights paid for with points?
That’s right, points tickets don’t have to be cancelled like paid wanna get away tickets do. You do have to cancel to get your taxes refunded to your card.
I disagree. I think Southwest didn’t give us details because the details are too complicated, relating to specific fare class. The simple version is that Southwest wants to steer redemption toward flights which will not sell out. That’s a soft version of capacity controls.
Minimum points per redemption would be easy to explain. This would also conflict with the objective of inducing members to use points on the least popular flights.
Unfortunately, you’re almost certainly correct.