Calm Down, The Southwest Devaluation Isn’t As Bad As It Seems
Hit the panic button! Southwest Rapid Rewards just did a massive devaluation. They are only worth 1.2 cents now? What! I was getting like 1.5 cents per redemption for them. I am done with Southwest, as soon as I burn my miles they are out of here!!
Well 1.2 cents is accurate, and not at all very accurate at the same time. For some reason some people like to base the valuations of Southwest points without including taxes and fees. We don’t base hotel points on the base rate minus resort fees and other taxes so why do people do it with Southwest? Your guess is as good as mine but it doesn’t make sense to me. The true value includes the taxes and fees since you still avoid that cost so of course it should be included.
In my recent Chase personal card rankings I pegged Southwest Rapid Rewards points at 1.4 cents, which was probably a little on the lower end. Well where do they sit now? Let’s take a look.
I did 8 dummy one way bookings on a random date in May and here is what I found:
- Cheaper flights still bring the best return because the taxes and fees make up more of the cost. Super cheap flights, like $49, can get you over 1.7 cents per point.
- $100 flights will get you in the 1.4-1.6 cent per point range
- Expensive flights, $350-$450, will get you in the 1.32-1.36 range.
Overall the average across the flights, after adding up the fares and subtracting the $5.60 fee for each, I got an overall average of 1.394 cents per point.
Wait, that is right at 1.4 cents like you said on the rankings! Why yes, yes it is. While my valuation was on the low end before it is smack dab in the middle now.
The range that I saw was 1.33 cents per point – 1.72 cents per point. I am sure you could stretch a little bit either way with your findings but most of the time you will fall in the 1.4-1.5 range. Because no one is flying Southwest on a $400 one way flight now are they? Most people will be booking in the $100-$250 each way range which will get you this level of redemption.
Southwest did increase the cost of Rapid Rewards for flights to 83 points per cent from 78 points per cent and there was a devaluation. But on the actual redemption side I don’t think you will feel it all that much overall, especially on the cheaper flights. This was somewhat expected after they let people turn vouchers into points. This is about a 5%-6% devaluation overall. Over the next 12 months or so I would expect devaluations from many airlines and hotel programs so be prepared for that.
So calm down, and fly on. It isn’t as bad as you are seeing out there 😉.