Southwest Rapid Rewards Point Devaluation Announced March 31, 2014
Southwest Airlines has sent out an email yesterday announcing a change to the value of Southwest points. Previously, you would only need 60 points per dollar to redeem Southwest Rapid Rewards points for Wanna Get Away fares. Starting March 31, 2014, each dollar in Wanna Get Away fares will require 70 points. This is a devaluation of about 15%. Currently, each Southwest Rapid Reward point is worth 1.67 cents. After the change, each will be worth 1.42 cents.
We will still be able to book travel for after March 31, 2014 at the current rate as long as we get our tickets by then. No one likes devaluations, but I appreciate Southwest giving us over 6 months of notice on the change. With 50,000 point credit card bonuses flying around and Companion Passes so easy to get, it’s hard to sustain such a rewarding program in the long run and this is only business. They’re being very open about it and giving us plenty of time to use our points.
“With 50,000 point credit card bonuses flying around and Companion Passes so easy to get, it’s hard to sustain such a rewarding program in the long run and this is only business.”
That may be true, but the “only business” argument doesn’t fly (pun intended) with me. There is no excuse for devaluing a rewards system where the value of points is tied directly to the cost of fares. As a revenue-based system, Rapid Rewards already has built into it the ability to absorb cost increases. As fares go up, the number of points required to book them go up. Simple.
Although they imply that it is, this decision clearly isn’t about cost increases or the cost of sustaining the program — it’s about lowering the value of points without increasing fares. Putting that in terms of real numbers helps: for someone like me with more than 300,000 Rapid Rewards points, this is a loss of more than 51,000 points in value. Ouch. Compound that across their entire member portfolio and the devaluation becomes staggering.
I could more easily understand making changes to future offers (lowering credit card signup bonuses and making Companion Pass attainment more tied to “butt-in-seat” travelers), than reaching into my points bank and taking 17% of my points value. I wouldn’t like it, but at least that change is defensible and makes sense. In this situation, it’s like Southwest is saying, “Remember that big program change a couple years ago where we went to a revenue-based system at the magic number of 1.6 cpm? Yeah…um…we got it wrong. Oops.”
In this case, Southwest wants to have their cake and eat it, too. Or as someone on their FB page put it — Southwest wants to have MY cake and eat it, too. And they’ve certainly left the door open to making “changes from time to time,” so I wouldn’t be surprised to see those future offers lowered and Companion Pass changes in the not-so-distant future anyway.
@Jim, you took the words out of my mouth. A zone-based or mileage-based program has some justification for changing award charts from time to time. Otherwise the cash value of their miles keeps increasing when fares go up. We like that, but if they have some justification if they choose not to have that happen, as long as there is sufficient advance notice of a change. This Southwest move is just confiscation – too many points out there, so we’ll take them back. I guess I’ve for a few years now felt that Southwest is overrated as that consumer-friendly outlier of an airline, and this just intensifies that perception.