Southwest devaluing Rapid Rewards by ~15% as of March 31, 2014

Southwest sent out an email to members yesterday that in part reads as follows:

We want to inform you of an upcoming change to the Rapid Rewards® Program that will affect the number of points needed for reward travel. Wanna Get Away® reward flight bookings made on or after March 31, 2014 will require 70 points per dollar. This is an increase from the 60 points per dollar currently required. Anytime and Business Select® reward flight redemption rates, as well as the points per dollar you earn when flying, will remain the same as they are today.

Rest assured, Rapid Rewards will continue to provide industry-leading benefits that you enjoy today—including unlimited reward seats, no blackout dates, and points that don’t expire*.  We hope you understand that in order to continue providing these benefits, we must make changes to the Rapid Rewards Program from time to time.

Thank you for your continued loyalty, and for more information about redeeming points, please visit southwest.com/redeem.

To start off on a positive note, at least they’re giving over six months advance notice. If you’re going to make a change, that’s the right way to do it.

That being said, this is a pretty major devaluation. Wanna Get Away reward bookings are being devalued by ~15%. Southwest has a revenue based frequent flyer program, so the number of points required for a redemption is directly dependent upon the cost of a paid ticket. So in this case the number of points required per dollar for a Wanna Get Away fare is increased from 60 to 70.

While I of course don’t like devaluations, I kind of expect them from “traditional” frequent flyer programs with set award charts. A lot of circumstances regarding redemptions can change for these programs, such as their partners, their product, and ultimately the cost of travel as ticket prices increase and as inflation occurs long term. Traditional award charts have no way to account for that, aside from increasing the number of miles required.

But it’s a bit different when you’re using a points currency where each point can be redeemed for a certain dollar amount towards the cost of a ticket. If the cost of airfare goes up, so does the cost of a redemption. So in theory you’d think the points would be inflation proof, aside from the inflation that’s already occurring with the cost of tickets.

So why are they making the change? Well, because they can. Southwest really is in a league of their own among US airlines, and a lot of people love their frequent flyer program. It’s understandable that a lot of people get frustrated with more traditional programs where it can be tough to find award space, and they’d rather view the points they earn as a “travel bank” of sorts. And while people will be frustrated, I don’t think they’ll change their behavior whether it takes 60 or 70 points per dollar. And I think Southwest knows that, and that’s why the email they sent out doesn’t even try to come up with a BS excuse or explanation for why the increase is happening.

Anyway, I’ve said it before and I’ll say it again, especially after this announcement — my money is on some major adjustments to the frequent flyer programs of American, United, and US Airways later this year or early next year (depending on whether the American and US Airways merger goes through or not). Late last year and early this year was a period of devaluation for hotel programs, and now we’re seeing it with airlines. Delta has already devalued their chart as of next year, now Southwest has, and I’m sure American, United, and US Airways won’t be far behind.

Always earn and burn!