Southwest Increases Wanna Get Away Fares
It seems like the only news we get nowadays is bad news. I guess no news really is good news. Southwest just came out with some changes to their Rapid Rewards program. The cost of business select and anytime fares will be going down (who cares). The cost of wanna get away fares will be increasing (pretty much every single points redemption).
Details on the Change
It seems like Southwest is trying to get the redemption rates to match up for all classes of service. You can see a chart in Gary’s write up at View from the Wing which shows all classes of service getting a redemption rate of 78 Rapid Rewards points per dollar (not including taxes and fees).
By making redemption rates the same across all services it has had the following affect:
- Business select redemptions have decreased by 35% (120 points per $ to 78)
- Anytime fares have decreased by 22% (100 points per $ to 78)
- Wanna get away fares increased by 6% (72-74 points per $ to 76-78)
Some may consider this overall a net positive since they are vastly reducing the cost of two services and slightly increasing the cost of wanna get away fares. That is just deception on Southwest’s part since almost all Rapid Rewards redemptions are wanna get away fares. Redeeming points for any other class of service is a bad redemption. It should only be done as a last resort.
Overall it is a devaluation of 6% which isn’t huge but it changes how you should use your Ultimate Rewards points.
What Should you do Going Forward
I have always valued Southwest Rapid Rewards points in the 1.5-1.6 cents per point range since I don’t remove taxes and fees from the calculation. If the points save you from paying them then it should be included. With this devaluation the value of Rapids Rewards points drops to the 1.4-1.5 range.
That is significant for Chase Sapphire Reserve cardholders since you can book any travel at 1.5 cents per point, including Southwest. You do need to call into the Ultimate Rewards redemption center to book Southwest flights (866-951-6592) but you will get a guaranteed 1.5 cents per point for every flight. And since it is considered a cash booking you earn Rapid Rewards points for these bookings.
In the past it was 50/50 on what was the better deal since you could get, on average, 1.6 cents per point. Adding in the P.I.A. factor of having to call Chase and most people continued transferring Ultimate Rewards points to Southwest.
You should do the calculation before booking each flight. If using Rapid Rewards are getting you 1.5 cents per point or less you should call Chase to book. You will be earning 9-10% back in points for the booking. The most valuable redemptions tend to be sub $100 fares since the taxes make up a large portion of the fares, making your points more valuable. But, with these changes I think you will be coming out ahead by booking with Chase more often than not going forward.
The one caveat to this would be if the booking was highly speculative. It is easier to get the points deposited to your Rapid Rewards account versus needing to keep track of travel vouchers.
For the rest of us non CSR cardholders we are just stuck getting less value for our points.
CLICK HERE to compare this with other travel rewards credit cards
Conclusion
While a 6% loss in value isn’t the end of the world it does change the way some people will redeem travel on Southwest going forward. I wonder how much this will cost Chase in the long run? I am sure that Chase purchases Rapid Rewards points at a cost much less than 1.5 cents a piece.
What is your plan going forward? Will you continue to transfer to Southwest or book through the Ultimate Rewards portal?
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I have never been offered a retention offer for any of the SW cards I have opened over the years—if you get an offer, I would like to know the script please.
Oh great, I’m glad I redeemed a big stash on a trip a month ago. Now my annual fee on the SW card has come up and this is good excuse to juice a better retention offer out of them.
Perfect timing! Yes that should hopefully help with the retention offer.