The Winners and Losers of Southwest's New Rapid Rewards Program

By now you have heard about Southwest’s new Rapid Rewards program, and have even read how I, in part, predicted this development in a guest post I wrote back in 2008. After careful study, I came to the conclusion that this new program is radically different than the old one, and is a mixed bag depending on how you used the old program.

Here is how I feel the winners and losers shake out:

Winner:  People who want to redeem many awards for shorter flights. I live in the middle of the country, so I never have the opportunity to fly transcontinental.   I always resented that a little bit, as people on the coasts could redeem a Southwest award for much further than a Denver resident could.   In fact, I never really got a lot of value out of my awards, as my redemptions were never really for tickets that cost a lot of money.  With the new program, instead of flying across the country by myself, I can redeem my points for a trip for my whole family to visit a nearby place.

Loser: People who earn miles by flying short legs. Yeah, if you were flying back and forth on cheap flights between LA and Vegas every week, only to redeem your award for a last minute trip to Boston, you are being screwed.    If you were booking each flight separately to maximize your RR points, that strategy will now be, well, pointless.

Winner: People who last minute travel If you work for a company that is always sending you places with little notice, you now have some good reasons to choose Southwest.   Instead of receiving a couple of RR points, you can now get a huge kickback on your last minute business travel as your rewards will be based on Dollars, not flights, and you get more points with the more expensive fare classes.

Loser:  People who redeem awards for last minute travel.    A long time ago, I was able to redeem a Delta award for a same day flight.    Those days are long gone on Delta, but I have a friend who redeemed an Award on Southwest for a flight the same week.    He would not be able to do so economically under the new Rapid Rewards program.   If he were to attempt that under the new system, he would be bumped up to a much higher fare class and pay much more for his points.

Winner: People who want to redeem awards for Hawaii and international flights. Southwest will allow redemptions on other carriers, although it is not really clear how this system will work, or what it’s value proposition will be.    Nevertheless, there are road warriors out there who put in the big miles who have a ton of points, but no desire to redeem them for yet another domestic trip.   Those people can now dispose of their points going someplace more exotic than Burbank.

Loser: People who don’t have the Chase Rapid Rewards Card You know those great reward redemptions for Hawaii or international flights?   They are only valid for holders of the Chase card.   Can’t qualify or don’t want to pay the annual fee?   Sorry.    Other than Delta’s cash and points option, I don’t know of any other airline reward that requires you be a holder of their affiliated credit card.

Winner: Companion Pass Holders The holy grail of the RR program has always been their vaunted companion pass.    If you achieve this status, you can use it in an unlimited fashion to get a free companion ticket anywhere you go.    Couples traveling together can save huge.    It used to be that the companion pass expired after 12 months if you didn’t re-qualify.   That left people on a constant treadmill.    Now, the companion pass will be valid until the end of the calendar year that it was to expire.   You can also change your companion designation three times during your qualification period.   This is great for swinging jet-setters who may have broken up with their designate partner.

Looser: People who redeem on the same route they purchase tickets on. Let’s say you fly from point A to Point B every so often.  You used to earn two RR points per round trip, and a free ticket every 8 round trips.    Now, you will need to fly 10 round trips at any given fare level to earn one award ticket at the same fare level.   I call that a 25% devaluation.