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Southwest! You’re supposed to be a beacon of light in a murky travel industry filled with customer-unfriendly policies, depreciating airline miles, and zero transparency.
Just as America was lacing up its shoes for summer travel to a slowly opening world, Southwest points value has dropped by 6.4% overnight. What does that mean for you? It doesn’t sound like that much, but it’s significant. Think of it like this: a Southwest credit card bonus just became less potent — by thousands of points.
Implications of Southwest’s sudden devaluation
The Points Guy was first to report this devaluation and records the sentiments of Southwest managing director of marketing, Jonathan Clarkson. He acknowledges the modified points value but surprisingly assures loyalty members that it has nothing to do with COVID-19. The program simply hasn’t been devalued in three years, so it was due for an adjustment, anyway. Wow.
Clarkson also acknowledged that members have been earning points just as fast as any other year, but they’ve not been spending them. In other words, Southwest is preparing for an unprecedented stint of flying planes filled with customers who aren’t paying for their flights.
So what does the devaluation look like in practice? Here’s a quick example: The Southwest Rapid Rewards Performance Business Credit Card comes with 80,000 points after you spend $5,000 on purchases in the first three months of account opening. After a 6.4% devaluation, that bonus would now have to be improved to 84,800 points to give you the same value you’d have received just a day or two ago.
That’s really annoying — especially considering travel has just begun to open up in a serious way. Many of us have tons of miles and points atrophying in our accounts from stymied travel plans the past 13 months. Now it feels like we’re being punished because of a sudden rewards hyperinflation due to the coronavirus lockdown. We would have loved to use our Southwest points in 2020!
This doesn’t necessarily indicate a trend for other airlines, but it wouldn’t be surprising to see devaluations from many airlines in the near future. Delta recently devalued their miles for the second time since October of last year.
What is the new value of Southwest points?
We previously estimated Southwest points to be worth 1.5 cents each. With a 6.4% devaluation, that would bring the estimated value to 1.4 cents each — on par with airlines like JetBlue. But just to be sure, we searched 10 random dates and destinations to see how much Southwest points are worth.
To figure the value of Southwest points, follow this formula: (Cash price of ticket – taxes and fees charged with award ticket) / points price. For example, if the ticket costs $100, but you’ll pay 7,000 points and $5.60 cents in taxes, the equation would be: ($100 – $5.60) / 7,000 = 1.35 cents per point.
Here’s what I found. I’ve arranged them by order of flight distance, from shortest to farthest. There almost seems to be a correlation between the distance you fly and the value you’ll get per point (the shorter the better):
- Oklahoma City to Dallas – 1.73 cents per point
- Cincinnati to Chicago Midway – 1.55 cents per point
- Boston to Philadelphia – 1.73 cents per point
- Austin to Phoenix – 1.47 cents per point
- Indianapolis to Miami – 1.44 cents per point
- Nashville to Cancun – 1.29 cents per point
- San Antonia to Chicago O’Hare – 1.51 cents per point
- Fort Lauderdale to Aruba – 1.34 cents per point
- Seattle to Orlando – 1.37 cents per point
- Los Angeles to Honolulu – 1.3 cents per point
I SAID ALMOST.
The average value per these random searches is: 1.47 cents per point. That’s still extremely close to our previous valuation — though we’ll likely affix our value lower in light of this news.
Remember: You can use Chase points, too!
You likely already know that Southwest is a Chase transfer partner. That means you can convert Chase Ultimate Rewards points into Southwest points instantly at a 1:1 ratio.
Here’s something you might not realize, though: You can book Southwest flights via the Chase Travel Portal. You can’t find the flights online, so you’ll have to call Chase to do it (866-327-9076). I’d only recommend doing this if you’ve got the Chase Sapphire Reserve, as you can redeem Chase points at a rate of 1.5 cents each. Other Chase cards offer less value through the Chase Portal.
After this devaluation, it makes even more sense for Chase Sapphire Reserve cardholders to book Southwest flights via the Chase Portal. Not only will you secure a value of 1.5 cents per point, but you’ll also earn Southwest points for your flight. You don’t earn Southwest points when you book an award flight.
Here are the earning rates:
- Wanna Get Away fare: 6 points per dollar
- Anytime fare: 8 points per dollar
- Business Select fare: 12 points per dollar
That means for a $100 flight, you’d earn 600 Southwest points with a Wanna Get Away fare. Not a ton, but it could tip the scale when you’re deciding between transferring your Chase points to Southwest or booking through Chase.
Also note that once you use Chase points to book a Southwest flight via the Chase Portal, you won’t get those points back if you decide to cancel (unless it’s within 24 hours of booking). The Chase phone rep will deduct the points from your account and then Chase will use their money to book your travel. You’ll still get all the generous change and cancellation policies of Southwest. If you decide to cancel, you’ll have one year to use your travel credit.
Bottom line
In an uncharacteristic move, Southwest has made traveling more expensive for members of its loyalty program. Devaluations happen, but the thing that irks me is that there was ZERO warning beforehand. Lack of transparency is not good for business, Southwest. Don’t do it again.
Let me know your thoughts on this devaluation. And to stay on top of important miles and points news, subscribe to our newsletter!