Southwest Rapid Rewards Devalues Points With No Notice

Absolutely no reason to "adjust" the value of points in a revenue-based system. It's bad enough that the points can't get you anywhere cool (sorry - CUN and PVR - you're not cool) but now devalued? No thanks - I'll keep flying United or AA. Cathay Pacific or Swiss business class is a much better redemption than cattle class to Jackson, Mississippi.

If you have the CSR, cant you phone up and purchase WN flights for 1.5 cents per point? I remember at one point you couldnt do it anymore but I believe its back.

There is nothing at all surprising about The Points Guy acting like a marketing platform for business, rather than an actual insider service to points collectors.

You and Gary and others who say there's no reason to devalue a revenue-based program miss a factor - credit card signups. If (make it up) 20,000 people sign up for a Rapid Rewards credit card and each earn 60,000 rapid rewards points, that makes 1,200,000,000 new points out there searching for free tickets. Tickets which, of course, bring in no immediate revenue to Southwest. There is therefore a direct financial incentive for Southwest to devalue their points currency, in order to reduce the number of free tickets they're giving out.

So the same laws of economics apply - their currency will be devalued over time as long as they keep printing money. Or, in this case, points.

other words, don't be a sucker and buy those discounted miles. I am looking at you, AS! Refuse to buy any miles from them till they announce new chart. Also you now know why Chase offer bigger WN sign-up bonus to soothe inevitable devaluation pains..

@ James K. -- Well of course programs ultimately devalue "because they can." They control both how many points they issue and how much each point is worth. However, these aren't "free tickets," as Rapid Rewards is being paid billions of dollars (over time) for those points. They choose to award more points through credit card bonuses because it's good money, and then after the fact they decide they want those points to be worth less.

No one is disputing that programs can't do this, I'm just arguing that it's wrong.

Ironically Delta SkyMiles sets a good example in this way. While I'm not a fan of the program transitioning to a revenue based one, I at least respect that the goal is to make each SkyMile worth a cent. That's literally a floor value, even though Delta is printing miles endlessly.

@ Philly380 -- Your frustration seems misguided? Alaska has said it will provide significant advance notice of award chart changes, and I also only recommend buying miles with a fairly short term use in mind.

If Southwest points are now worth 1.2CPM, why would anyone transfer Chase points (except for small top ups) vs using the CSP/CSR travel portal?

The CSR was already a better deal, but now even the 1.25 CSP redemption value is worthwhile.

@ Ben -- Another scum of the earth loyalty program devalues. What a shocker. This is called theft in every other setting.

@ William -- To answer your question, it's because many (most?) people don't know better. Also keep in mind that probably quite intentionally, you can't redeem Ultimate Rewards points towards Southwest flights directly through Chase's online portal.

People actually read The Points Guy? I guess all its readers will have to use more points now for gift cards redemptions.

I think the answer to the "why" is in the TPG article - members have continued to earn points at roughly the same rate as they did pre-pandemic, but have not been flying, and thus redeeming, at the same rate. Thus, you have more points floating out there than you would in a normal environment due to an external shock. Obviously, that phenomenon was probably helped along by SW's CC partner, Chase, in offering lots of spending bonuses in order to move the SW card to the top of the wallet where credit card spending had somewhat curtailed. That is not to say that it doesn't suck or that they shouldn't give notice, but I do get where they're coming from (their deflecting about the pandemic notwithstanding).

@ Rob -- But the whole point is that with a revenue based frequent flyer program, points are just another form of payment towards a ticket cost. Southwest has been paid in one form or another for all those points that have been issued in the past year while people haven't been flying. It's not like those points are being issued for free.

It's like saying that airfare will be more expensive because there's a ton of outstanding airline vouchers people are getting ready to use, due to not having traveled for the past year.

To be clear, I'm ultimately not too surprised, in the sense that programs do this because they can. But that doesn't justify it in any way, in my opinion.

I'm not sure which is worse - a no-notice devaluation during a pandemic or choosing to announce this information via TPG.

Looks like I had just booked my Southwest flights just in time! Booked two Hawaii interisland flights with Rapid Rewards last week for October. Still would have had enough points for this increase, but would have cost me at least 1,200 more RR points if I had waited.

Southwest has masqueraded as a ‘low cost’ airline for years. I understand that bags are included in the ticket price. Notwithstanding, they are very seldom the low-cost option out of Chicago.

I stopped reading TPG after he posted an Instagram photo of him stepping out of Marriott's limo at the Oscar's. (OK sometimes I glance, but I'm not proud and its only for the articles, I swear)

@ Ben -- You should consider dropping the public grudge against TPG. Just act like he doesn't exist. He doesn't in my world. I don't read their inaccurate blog. If I want well-written, well-researched, thorough information, I turn to your blog.

The CSR card is worth 1.25 cpp when redeeming through ultimate rewards portal rather than 1.5 cpp? Thats news to me if that change was made, I dont see such after some google searching.

@ Luke -- Nope, 1.5 with the CSR, 1.25 with the CSP. Nothing has changed there.

@ Gene -- Fair enough, and usually I'd only go there if I want to read news from a couple of days ago. However, in this case I saw the story linked on Twitter, because it was the source, so it only seemed fair to give credit for the information (and then when I started reading I was shaking my head, so...). Anyway, appreciate the kind words!

I'm not always a fan but this TPG article seems pretty fair, no? "That said, this devaluation really stinks, especially for customers with a large balance of Rapid Rewards points, and anyone who opted to take the airline up on its (seemingly generous) points conversion offer last year."

@Marc, That's pretty old news. They are, however, the best/only carrier for direct flights if you're not traveling from/to hubs. And for anyone without status, comparing flights has to include ancillaries like now being forced into paying more for seat assignments as well as the checked bags you noted. EarlyBird is still a complete bargain compared to AA paid seat assignments, for example, if you want a seat towards the front of the aircraft.

As for the article at hand, this is still SUPER shady from Southwest. I'll be surprised if there isn't litigation on them pushing customers to convert their vouchers to points, and then devaluing the points. They had the forethought to push this into the news cycle via the dirtbags at TPG, so there's little doubt in my mind that they knew they were going to devalue back when they were pushing these Voucher->Points conversions.

A few years ago I jumped into Southwest and started earning companion pass and A-list yearly. With less flying in 2020 I spent enough on Chase cards to earn both for 2021. But now Southwest is trying to push me away. They extended my 2020 status over the top of what I had earned and have not yet extended my 2021 status. If I were Chase I'd be mad that Southwest is not only devaluing points value but also the value proposition of putting spend on their cobranded credit cards

Ugh, the worst part is that they let you turn your vouchers from flights that were cancelled due to the pandemic into points. Seemed like a great deal at the time, and now I can't even get the same flight back with those points.

@ Lucky...Not a huge fan of TPG site anymore. They closed off being able to make comments and there just isn’t a lot of “meat on the bone” despite that site churning out a ton of articles. I learn more from your site. I like that we can make comments and you will routinely respond to many. Many commenters will point out things in your stories that need to be updated and you thank them.

As for Southwest I’m glad I haven’t gotten their credit card. They are flying to Savannah which is nice, but I have to be picky of the cards I pickup given how many I have now and this devaluation isn’t not pushing me closer to getting their card.

@Ben - sort of. However, the difference between the voucher example you've given is that with the points, the number outstanding/issued has continued to grow at the same rate but with far-reduced opportunities to redeem them as would be available in a normal environment. As another poster pointed out, they've effectively printed more funny money than their central bank may have been able to stand behind, at least from a financially-healthy perspective. The rates at which they were paid by Chase for the points probably did not contemplate a year where their consumers mostly hoarded the points they continued to earn. And SW didn't raise airfare for everyone, as your voucher example suggests - they simply made the vouchers less valuable to those who have them based on their expectation that the "voucher holders" (i.e., people with points balances) are going to want to redeem them after an extended period of not doing so.

Pent up travel demand + a greater supply of outstanding liability to pay for that travel in a way that does not compensate the business = I get it. But they probably knew this was coming and could have let everyone know a few months ago.

I'm glad the Gen Xer who wrote the first comment has this space to work out some of his insecurities 🙂

To be specific, you need to adjust the redemptions over time if you have an award chart *and issue points based on revenue* -- so like what many hotel programs do, or what AA does now.

If you have an old-school airline program, like what AA did 10 years ago or Alaska still does now, where both earnings and redemption are disconnected from prices, in theory you shouldn't need to adjust the award chart because in theory 10 2,500 mile-earning trips cost more over time in parallel with the increased value of the free flight you can get with 25,000 miles redeemed.

@Ben TPG knew about it for a while. I watched a IG video of theirs yesterday where they mentioned that an ‘unannounced’ devaluation is coming up ‘tomorrow’. They had ample notice.

I don’t get the mindless hate for TPG. Sure they are less transparent about their conflicts and post suboptimal SUB links, but they have some good contributors like Summer, Zach, Richard... If the research is good, don’t knock the source

In another article: “Here are more opportunities to trade cash for ever-devaluing miles and points!”

Queue Darth Vader (or name-of-airline-with-rewards-program): "I am altering the deal. Pray I don't alter it any further."

at the end of the day, there will be a line of suckers (a lot of us haha, i dont fly SWA, but i still sign up for other program's cards) still applying for their credit cards, still purchasing an airline ticket, and still redeeming their points. the airlines know they can get away with it. what other option do we have?...

Even with the devaluation I still have enough points on WN for 2-3 "free" roundtrips. Just noticed at the grocery store today that certain quality steaks just went up $2 per pound. I eat way more than I fly (but not steak, sticks in my teeth) so which is the bigger rip-off?

Really could have been a lot worse. No one likes rising prices, but SW can still be a bargain. My wife just got a companion pass through the Chase card offer, so I am not going to complain about a 6% rise in the cost of her ticket when I am flying for free.

This is incredibly annoying. I too did the conversion last year thinking would be a good place to park the unused tickets. Now live next to an airport SWA doesn't serve (EGE) and they do this. I remember reading the SWA book "Nuts" back in college - they have clearly lost their way

Hi Ben, I have qualified for the Companion Pass during the last 10 years. I have not spent enough money to keep pace since January 1st and do not anticipate that I’ll reach the 125k benchmark by the end of 2021. As you know, SW spotted established CP flyers 25,000 points in January to jump start the quest to the 125,000 goal. Question: Have there been any rumors that SW will make a second bonus deposit of points before the end of the year, to help loyal Companion Pass customers make a realistic run to 125K? Thanks

You write that "Historically points values have been roughly [...] 76-78 points per dollar". Actually, when Southwest started using points, they were 60 points per dollar, with base earnings of 6 points per dollar. At that level they were "fly 10 flights, get the 11th of equal value free". And that was a huge devaluation from the earlier "fly eight flights, get the ninth of possibly much greater value free". Now we are at "fly 14 flights, get the 15th free", which is what 84 points per dollar comes to.

Yes, Southwest gives extra points in some cases to motivate behavior it considers desirable, such as earning 35,000 butt-in-seat points (that is, spending nearly $6000 on seats) in a year, or paying premium economy prices (Business Select) for its basic economy travel. That doesn't change the overall effect, a steady transition from one of the most generous frequent flyer programs to one of the least generous.

What used to be a 25,000 point trip RT to Florida, sometimes less, just doubled. I won't reach 100,000 points for the two of us to go there to catch a cruise for our 50th the rest of our lifetime. Disappointed in SW. Been loyal cardholders for 20 years. My saved 34,000 points are pretty much worthless especially with the cost of purchasing more points.

I think it terrible especially with everything going, they took away what we were already getting/earning and started charging us extra for it. All around the same time they created a "Wanna Get Away Plus" Category to charge extra for what we were already earning, raise their prices and devalued the points we had already earned without notice! It's a really crappy thing to do and I've always flown my family on Southwest which we tend to fly about once a month since we moved so far away from our family for work and with 5 people to fly their price increases have got me looking at all the other airlines now. We may have to either take more time off work to drive and cut back on how much we see our family now. Other airlines are cheaper and some aren't after they charge crazy high seat fee's. Bottom line is when booking through Southwest before we felt we were treated fairly and given the best rates but unfortunately were not feeling the "Love" anymore, so we will have to start looking at all our options now.