For five years, Southwest Rapid Rewards has worked tirelessly toward redefining their future when it comes to loyalty programs–and if it hadn’t been for an exhausting makeover of the database that measures and runs the new Rapid Rewards, we likely would have seen this new program a year ago.
But all that aside, March 1 marks a new chapter in one of the most enduring frequent flyer programs in the world. From its meager start as The Company Club in 1987, little had changed with Southwest’s approach to its frequent flyer program–keep it simple. The current electronic credit model followed the punch card approach and it all seemed to fit. But Southwest is no longer, and hasn’t been, the same airline. It is now the largest domestic carrier in the largest air passenger market in the world.
Southwest was not content with its current award-winning version of Rapid Rewards, because the program simply did not measure up to the others when it came to two very important issues: 1) appeal to business travelers deep into the elite levels of other airlines and 2) a frequent flyer program as a revenue generator.
Even with the success of “Bags Fly Free,” Southwest still needed a frequent flyer program to be more flexible than the current credits system and thus (please welcome…) “points” as the new currency of Rapid Rewards 2.0.
We might call this aspect of the program TrueRewards, with apologies to JetBlue’s TrueBlue program or Rise with apologies to Virgin America Elevate since all three now award “points” based upon “airfare.”
But all airfares aren’t created equal and thus Southwest will award varying amounts of points based upon the price you pay for your ticket. Want more points? Pay more for the ticket or simply accept the fact that you’ll have to fly more.
Free flights are earned by accumulating Rapid Reward credits. One credit is earned with the purchase of each one-way trip. A total of 16 credits are required to earn a standard award for a free roundtrip ticket.
Free flights are earned via the new points system. The number of points accrued per flight is calculated by multiplying the fare cost you pay by a multiplier based on your fare class: Business Select = 12 points per dollar, Anytime = 10 points per dollar, Wanna Get Away = 6 points per dollar.
But this program is much more, in fact there’s so much more that it borders on being complicated–an unfortunate occurrence that might just mean that the tail (frequent flyer program) is wagging the dog (Southwest Airlines) on this one. Members earn differing points based on airfare and differing points based on airfare are required to redeem.
When it comes to redeeming your points, the prior credit system was steadfast in its simplicity. And while Southwest can arguably point out that they now have no blackout dates with their new program, well, so can just about all the remaining airlines including United, American and even Delta. So there is no new ground being discovered here. And it seems that most of the press seems to miss the point, that while Southwest has “no blackout dates,” they have a system of redemption that mimics the not-so-popular but realistic “double miles” for award redemption (if you pay double the amount in miles, you can find any available award seat), although we are pleased to see some middle ground with Southwest’s Anytime award redemption option.
The new redemption program more closely resembles that of Delta SkyMiles in that it has three levels of award redemption rather than the more common two levels of redemption. But there is a gem here, because Southwest’s points redemption is related to fares, so points required for award redemption automatically will drop during fare sales, which means a new way to monitor your award redemption plans. Of course this also means that as airfares rise, so will your award chart. Here’s that change at-a-glance:
Sixteen credits are required to earn a standard roundtrip award ticket. When standard award tickets are not available for a flight, two standard awards may be converted into a Freedom Award (the current “double miles”). Freedom Awards can be used on any flight where a seat is available.
Free flights are earned by redeeming points. The number of points required to redeem a free flight is calculated by multiplying the price of a ticket for any given flight by the number of points per dollar required according to fare class as follows: Business Select = 120 points per dollar, Anytime = 100 points per dollar, Wanna Get Away = 60 points per dollar.
Another part of the award redemption process is the change to no blackout dates, meaning that all seats are eligible for redemption. Blackout dates is a tricky term because it can often mean two things: dates on which there can be no award redemption at all, and dates when there is award redemption but no standard award seats are left available to you.
Award tickets are subject to 15 blackout dates per year.
There are no restrictions based on the date you choose to fly.
More about the TrueRewards, we mean the Rapid Rewards 2.0 program: Just like JetBlue’s TrueBlue program, points never expire with activity. Southwest has adopted the industry standard here and as with other programs, your points never expire as long as you have activity in your account over a 24-month period, which honestly should not be a difficult thing for any active member. And it certainly beats those programs with an 18-month expiration date.
Other new features with more information to come: A credit card re-launch will include the ability to earn some tier points (elite status) based upon your credit card spend. While you’ll not be able to spend your way to a Companion Pass, it’s good to know that you’re much closer to this rich benefit than you’ve ever been in the past. True elite levels, A-List and A-List Preferred, have been added and benefits include elite-level access at airports with preferred passenger lines and the newest and greatest benefits of all–free WiFi. Since we can’t rely on Google promotions to pay for free WiFi all the time, we do love the fact that Rapid Rewards has become the first FFP to segment free WiFi for elite among the major carriers. Bottom line, all members in the new Rapid Rewards are not created equal! Thank goodness.
And finally, borrowing something from the playbook of new acquisition AirTran and its own award-winning frequent flyer program, A+ Rewards, Rapid Rewards credit cardholders will be able to redeem their points for international flights to more than 800 worldwide destinations (AirTran’s A+ Rewards members currently have this benefit in that program) and also for hotel stays and gift cards (More Rewards). But if we can give you an advance tip here–while SWA became famous for “peanut” fares, awards to international destinations will likely be based on “truffle” fares. Yes, you can now go to London, but you can’t earn points on flights to London.
So while Rapid Rewards 2.0 can’t boast of much innovation for the industry, it certainly is a more flexible and competitive program.
Go see for yourself at: http://newrapidrewards.com
On the surface, the new program might appear to be a step backwards for Rapid Rewards members. But that’s not the whole story. Under the current Rapid Rewards program, 16 paid flight segments earns a standard roundtrip award ticket. Like most other frequent flyer programs, Southwest allots a limited number of seats per flight for “discounted” (Saver) award redemption. Also, like other airlines, Southwest currently offers an award ticket that can be used when the “discounted” awards are unavailable–the Freedom Award–essentially double redemption.
Relative to other airlines, Southwest is fairly generous in their redemption statistics with an estimated seven to eight percent of their seats being filled with award redemption. American and United are one to two points higher while Continental and some other airlines average about the same. Under the new dynamic fare redemption rules, the Freedom Award premium doesn’t exist by name but is related to the Business Select award that may or may not be required.
Bottom Line for frequent flyers
For frequent business flyers who are more likely to purchase pricier Business Select or Anytime fare tickets, points will accrue much quicker with the new program. When frequent flyers then redeem awards using Wanna Get Away tickets, they will see their points go much further. When free flights are used for last-minute travel, they will likely see the same “double points” requirement of the previous Freedom Award.
Bottom Line for leisure travelers
But not all travelers who accrue and redeem points for personal travel will benefit from the new plan. It’s true that leisure travelers will accrue flights slower under the new plan than the old since they often are flying with Wanna Get Away fares. And these customers didn’t often have problems using awards in the original program since they tend to plan earlier.
However, there is a new benefit that will help offset these negative changes. The new program is accommodating to the infrequent flyer because they no longer are faced with the need to acquire and earn an award on a two-year cycle of expiring credits. Stay active with the new program and you will have active points.
A “hit” will be for members who have yet to typically qualify for an award in the current credit-based system. Because of the redemption opportunities being revenue-based, short-haul destinations from your location will be much more affordable and will likely make award redemption possible even for those who didn’t think they had a chance.
And we really have to rate the new elite levels a hit because of the free WiFi and the additional bonuses (25/100 percent).
The two “misses”–a simple program has become more complicated for the masses and the short-haul member of the program may feel the inflation of a revenue-based redemption system–no more gaming the program with cheap short-hauls for long-haul redemption. This sort of system has long flourished among hotel programs where members who earn points at full-service hotels then redeem at limited-service hotels where points go a lot farther. (Although on the reverse, the long-haul member gains with short-haul redemption.)
A “hit” perhaps for members of other programs? Given that this program now becomes very rich for short-hauls, might we see a return to short-haul awards from both American AAdvantage and United Mileage Plus when a few years back they introduced reduced awards for flights of less than 750 miles (or 751 miles in UA’s case)?
We chatted with our friends over on FlyerTalk, curbcrusher and nsx, and they politely and energetically provided us with some excellent background on the actual transition plan for awards and for elite membership including the popular Companion Pass benefit.
Here are the observations from these two very savvy Southwest Rapid Rewards members:
– Starting March 1, redemption prices in points will show on the flight selection page. This will allow us to get familiar with the value of our points for travel that we typically book. If you can estimate what the cash price will be, you will know what the redemption will require.
— You will not be able to combine cash and points directly for a redemption, but you will be able to buy the extra points you need and then redeem your points. Points will be sold in blocks of 1,000 for $25, with a minimum purchase of 2,000 for $50. The maximum purchase is 40,000 points.
— Unused redemption travel is redeposited to your account, just like current awards. Redeeming for Wanna Get Away tickets for relatives who travel infrequently is a good idea, because it avoids the problem of non-transferability of ticketless funds. If they fail to make a trip for which a cash fare was paid, the funds are locked in their name. With an award ticket, the points go back into your account regardless of who the (non-) traveler was.
— Without bonuses you are earning an effective rebate of 10 percent on your purchases, assuming that you earn and redeem in the same fare category. If you buy Business Select and redeem Wanna Get Away, your effective rebate is 20 percent and Southwest loves you. If you buy Wanna Get Away and redeem Anytime, your effective rebate drops to six percent because Southwest does not love you quite as much.
— Credit card earnings will be one point per dollar, or two points per dollar for purchases from Southwest and partners. The value here is comparable to the current program in which $19,200 of Rapid Reward Dollars earns 16 credits and a Standard Award. Rapid Rewards Dining will earn three points per dollar. One drink coupon book will be mailed to you every time you complete 10 paid one-way trips. With the smaller denomination of the frequent flyer currency, more partners (such as shopping portals) are expected to be added. There might even be some small-scale redemption opportunities in the future.
– Elite levels are now more competitive with legacy programs, and introduce the concept of Tier Qualifying Points (TQP), similar to legacy programs’ Elite Qualifying Miles (EQM):
A-List will now require only 25 paid one-way trips in a calendar year (vs. the current 32 in a rolling year) or 35,000 TQP within a calendar year. At this level you get all current A-List benefits plus a special phone number for reservations, priority standby and a 25 percent bonus on your flight points earnings. The 10 percent effective rebate becomes 12.5 percent.
— The new A-List Preferred level will require 50 paid one-way trips or 70,000
TQP within a calendar year. At this level you get all current A-List benefits plus an extra-special phone number for reservations, higher priority standby, free WiFi when the aircraft is WiFi capable and a 100 percent bonus on your flight points earnings. The 10 percent effective rebate becomes 20 percent. Top elites who buy Business Select and redeem Wanna Get Away will earn an effective rebate of 40 percent, which is very competitive with the top elite earning rates for legacy carriers.
– Priority standby will NOT include free same-day standby. You will still have to pay up to Anytime fare or higher to take an earlier flight than you booked.
— The Companion Pass will continue. It carries no elite travel benefits. With the new program, you can qualify or requalify for a Companion Pass based on either:
a) 100 one-way flights in a calendar year, or
b) 110,000 points (earned via a mix of flight points and partner points) in a calendar year.
These levels are essentially equivalent to the levels under Rapid Rewards 1.0. The main change is that you cannot qualify with a mix of, for example, 50 one-way flights and 55,000 partner points.
— For people buying high fares, Companion Pass qualification via points will be easier now. For people buying fewer than 100 cheap tickets, Companion Pass qualification will get a little harder. For example, an A-List Preferred member will earn 12 points per fare dollar. Total fare purchases of $9,167 for the year, $175 per week, will earn a Companion Pass. If you spend only $100 per week on fares you will earn 75,000 points plus any promotional bonuses. Credit card spending and other partner activity should be able to take you to 110,000 total points. Still, I expect the number of Companion Pass holders to drop by 25 percent or more due to the inability to mix point-based and flight-based qualification.
— Qualification for elite levels and for the Companion Pass will change to calendar years. Starting March 1, 2011, all of these benefits will expire at the end of a calendar year, not mid-year. There will be no mid-year expiration dates after March 1, 2011.
— You will maintain your Companion Pass or A-List or A-List Preferred status for the remainder of the calendar year in which you earn it and for the entire next calendar year. The transition from the current rolling qualification system will be customer-friendly, extending all currently earned status to the end of the appropriate calendar year. Transition details are somewhat complex and are explained below.
Transition for awards
– The transition for earnings is simple: You earn credits before March 1, 2011, and points for any activity that posts on or after March 1 (regardless of the activity date).
— You have a one-time option to top off your last 16-credit Standard Award at the ratio of 1,200 points per credit. At that point you get a Standard Award. From then on, you can only earn points, not credits. FlyerTalk member swag came up with a tip: It might be wise to delay exercising your option until you really need the Standard Award. That way it will carry a later expiration date if you don’t use it immediately. For this purpose, you need at least one leftover Rapid Rewards credit in your account as of March 1.
— You cannot transfer any Standard Awards into points. Your Standard Awards will expire, but they can be extended for $50 within a year of expiration. A Standard Award issued in early 2011 can therefore be reissued in early 2013 and can be used for travel until early 2014.
– After the transition date, you will no longer have the option to convert two Standard Awards into one Freedom Award.
Transition for A-List status
– During 2011 only, you will qualify for A-List status if you meet the criterion under either the old rules or the new ones:
(a) Take 32 or more paid one-way flights within a rolling 12 months, or
(b) Take 25 or more paid one-way flights or earn 35,000 Tier Qualifying Points in calendar year 2011.
If you already have A-List status that expires on or after March 1, 2011, your status will be extended until the end of 2011. If your A-List status expires in early 2012, your status will be extended until the end of 2012. Again, there will be no mid-year expiration dates after March 1, 2011.
— FlyerTalk’s SWABrian reports that Southwest’s staff will assign A-List Preferred membership to people who have the appropriate flight history (presumably 50 or more one-way trips) over the most recent 12 months. Apparently the (a) option mentioned above for A-List qualification during 2011 will not apply to A-List Preferred: This will reportedly be a one-time evaluation.
– Advice from FlyerTalk’s nsx: If you miss the cut for A-List Preferred but achieve 50 flights within 12 months later in 2011, I recommend that you write a polite letter to the Rapid Rewards department reciting your flight history and requesting an upgrade to A-List Preferred. I don’t know if this will work, but it’s worth trying.
– Regardless of your 2010 flight history, when you reach 70,000 points in 2011 or 50 flights in 2011, your status will automatically be upgraded to A-List Preferred with an expiration date of Dec. 31, 2012. This provides a strong incentive to increase your use of Southwest in 2011.
Transition for Companion Pass
– During 2011 only, you will qualify or re-qualify for Companion Pass if you meet the criterion under either the old rules or the new ones:
(a) Accrue 100 credits from any source within a rolling 12 months, or
(b) Take 100 or more paid one-way flights or earn 110,000 points from any source in calendar year 2011.
In particular, if you were on track to qualify under the old rules, you are still on track. Southwest will not derail your plans.
For the purpose of option (a), each one-way flight on or after March 1 will count as one credit, and partner points will be divided by 1,200 to give an equivalent credit count for Companion Pass qualification.
For the purpose of option (b), you will receive Companion Qualifying Points for credits earned through partners for the time period of Jan. 1, 2011 through Feb. 28, 2011 at 1,200 Companion Qualifying Points per credit. Flights will be credited according to the fare you paid times 12 points per dollar, even for Wanna Get Away fares.
— If you have a Companion Pass that expires on or after March 1, 2011, its expiration will be extended until the end of 2011 and your re-qualification period begins on Jan. 1, 2011. If you have already re-qualified for renewal by March 1, 2011, or if your current Companion Pass expires in 2012, your status will be extended until the end of 2012, and your re-qualification period will begin on Jan. 1, 2012.