So I was actually writing a different blog post this morning, about a trick that I had found about booking with multiple passengers on Southwest. But while I was writing that, I was noticing a lot of discrepancies with how much value we were getting for our Southwest Rapid Rewards points.
First, a bit of background on Southwest. Southwest is unique from most of the other domestic airlines in that their point redemptions are based specifically on how many dollars the fare costs. So whereas with American (or United or Delta), a roundtrip costs 25,000 miles whether it’s New York to Boston, or Miami to Seattle, at Southwest , it all depends on how much the fare costs.
The official word on the street is that to redeem points on Southwest, it takes 70 points / $1 for Wanna Get Away fares (after a devaluation earlier in 2014 – it used to only be 60 points / $1).
So here’s a random flight from Fort Lauderdale (despite my example in an earlier paragraph, Southwest doesn’t actually fly from Miami 😀 ) to Seattle in July
The first flight of the day, at 6:10 a.m. costs $423. So based on the 70 points / $1 metric, I would expect that flight to be redeemable for 29,610 points. But it actually only costs 26,111 points (plus a $5 fee). That’s 61.7 points. Similarly, the 6:20 flight that costs $323 costs 19,665 (60.88 points / $) instead of the 22,610 we might expect. I did a bit more sampling and the results were quite interesting. I thought I’d go further out in case it was something due to the devaluation change.
So at this point, a) I don’t know how they determine how many points a particular flight costs to redeem and b) it certainly doesn’t seem to be 70 pts / $. It doesn’t appear to be $60 either. It actually makes me nervous even posting this. There have been lots of reports of blogs posting these kinds of tricks only to get the deal shutdown.
Let’s break it down a different way – I took that final flight (HOU-SJU) and added it to my cart.
Although the flight costs $168, the fare itself is not actually $168 – it’s $138 plus taxes and fees. The $138 * 70 points / $ DOES in fact equal the 9,660 points that they’re charging. That makes me feel a lot better that there actually is a method to Southwest’s madness!!! That also explains the BOS-ATL discrepancy where 2 differently priced flights cost the same amount in points. They both had a base fare of $81.86 (*70 = 5,730 points), but the $99 one was a nonstop, vs. the $110 flight connected through BWI, which charged some additional segment fees.
The big thing to take away from this is that definitely changes the valuation of Southwest points. The conventional wisdom says that because of the published 70 points / $ valuation, that a Rapid Reward point is worth 1.43 cents. But even though the point is charged off of the base fare, if you were to actually BUY that fare, you don’t get to just buy it off of the base fare – you have to pay the whole thing! So you can see from my spreadsheet above, when we compare apples to apples (the dollar cost you’d have to pay vs. the points it would take to redeem), it generally takes about 60 points per $, making a point worth about 1.67 cents.
The best I saw from (admittedly limited) sampling was the $110 flight from BOS-ATL (through BWI) that you could redeem for only 5,730 points, making points redeemed for that worth nearly 2 cents! (1.91). While of course, the best point redemptions are the ones that get you to where you want to go, I think you’d get the best point / $ conversion rate for cheaper flights that have multiple connections (since paying in points means that you don’t have to pay the segment or other fees for each connection)
What do you think? Does this change the way you value Southwest points?
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