Ugh: Southwest Rapid Rewards Devalues Points With No Notice

For as customer-friendly of an airline as Southwest is, that doesn’t seem to extend to the frequent flyer program. Southwest Rapid Rewards has devalued points overnight, with no advance notice, in the middle of a pandemic (or I suppose towards the end of a pandemic, hopefully?).

Southwest Rapid Rewards points are worth 6%+ less

Southwest Rapid Rewards is a revenue-based frequent flyer program, so the number of points required for a ticket is directly correlated to the cost of a ticket when paying cash. Historically points values have been roughly as follows:

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• Southwest Airlines Wanna Get Away fares cost 76-78 points per dollar
• Southwest Airlines Anytime fares cost 78 points per dollar
• Business Select fares cost 78 points per dollar

Well, it would appear that Southwest Airlines has increased the number of points required for flights by roughly 6%, and you now need 83 Rapid Rewards points per dollar of airfare. In other words, each Rapid Rewards point gives you roughly 1.2 cents of value towards the cost of a Southwest ticket.

Revenue based programs shouldn’t devalue

When you have a frequent flyer program with an award chart, I can kind of understand how there needs to be a devaluation every so often. After all, the cost of travel increases over time, so in order to match up with paid fares increasing, you also need to increase the number of points required for an award.

That same principle doesn’t apply with revenue based frequent flyer programs, as the cost of award tickets will naturally increase over time as the cost of paid tickets does as well. If I need 76-78 points per dollar of airfare, and if airfare increases by 20% over several years, then the cost of awards will also increase by 20%.

Frequent flyer programs are about building relationships with your customers, and that has to be done in good faith. It’s bad enough that people aren’t earning any “interest” on points that they hold onto, but it’s even worse when you consider people are getting double penalized — they’ll pay more points not just because the cost of airfare goes up over time (which is fair enough), but also because each point is worth a lesser dollar amount.

And then you add in the pandemic, which only makes it worse:

• Many people have been holding onto their points for over a year, ready to plan a post-vaccination trip, only to find their points are worth less
• Last year Southwest was encouraging people to convert vouchers into Rapid Rewards points at a “special” rate, but now those points are already worth less

Southwest’s communications strategy

It’s kind of interesting how Southwest went about communicating these changes. Usually when a loyalty program makes a negative change without notice, the program doesn’t bother communicating, and we find out hours later when readers notice something is a bit off.

In this case, it looks like Southwest officially informed at least one outlet of the devaluation before it went live, which I don’t think I’ve ever seen before in all the years I’ve been following loyalty programs.

The Points Guy was the first to report on this change at around 5 AM Eastern. This devaluation was made “overnight” and with no advance notice, yet someone over there spoke to Southwest’s Managing Director of Marketing about this. Unless that call happened at 3 AM, it sure seems like they got a heads up.

I suppose this was an attempt at damage control, and perhaps it’s not an unreasonable strategy, because I think the take on these changes over there is pretty “soft.” The devaluation is called “your run-of-the-mill, no-notice loyalty program devaluation,” and while it’s said that “this stinks,” there’s no bigger acknowledgement of:

• How unacceptable it is that there’s no advance notice being given to members, and that the timing of this is even worse than usual, given that we’re in a pandemic
• The fact that there’s no need for a devaluation to a revenue based frequent flyer program to begin with, since points requirements naturally increase as airfare increases

Rather they just pass on what they’re told, about how the change isn’t related to the pandemic, and how this could have happened either way:

“I had a chance to discuss this latest adjustment with Jonathan Clarkson, Southwest’s managing director of marketing. As Clarkson explained, this week’s 6% hike isn’t directly related to the pandemic — there hasn’t been in adjustment in three years, so it could have happened around this time either way.”

I’m not sure that makes Rapid Rewards members feel much better.

Bottom line

Southwest Rapid Rewards has just devalued its points overnight by roughly 6%, in a no-notice devaluation. While all points devaluations are awful, I find it especially bad when a revenue based frequent flyer program devalues, because there’s really no need for that to happen.

The number of points required for awards in these programs should naturally increase over time, to reflect higher airfare. Southwest Airlines is known for being such a customer friendly airline, so this sure is incredibly disappointing.

What do you make of Southwest’s devaluation?