Letters – August, 22 2011

Looking for a Fair Deal

In an interview last month, SWA’s Chris Herndon was asked why the new Rapid Rewards charges more points per dollar for Anytime and Business Select fares, which can be especially problematic if a customer has to change a ticket. In his non-answer he asserts that “the points currency spends like cash” and wrongly claims “it’s not unlike if there was a difference in the fare in dollars.”

In reality a simple example will illustrate how wildly different spending points is compared to spending cash.

Gary, a first time SWA customer, pays \$100 cash for a Wanna Get Away (WGA) ticket. When his plans change and only a \$300 Anytime fare is available for his new flight, he of course must pay an additional \$200 for his new ticket. His costs have tripled.

Loyal customer Laura “pays” 6,000 points for a \$100 WGA ticket. When her plans change and only a \$300 Anytime fare is available for her new flight, she naturally expects that her cost will triple (to 18,000 points), just as Gary’s cost tripled. Imagine her shock when SWA informs her the cost of her ticket has actually quintupled, to 30,000 points!

Suppose that Laura doesn’t have 24,000 more points. At the ticket counter, Gary whipped out his credit card and was charged \$200 (the fare difference). At the ticket counter, Laura tenders the last \$200 in her wallet but is told, “Ma’am, we need another \$100.” “Why? The fare difference is only \$200,” Laura might say. She is told, “We’re sorry, you can’t use your ‘spend like cash’ points for your ticket today.” It would be fascinating to hear Mr. Herndon’s rationalization of how Loyal Laura’s treatment was “not unlike” Green Gary’s treatment.

You might be thinking: So what? The variable point value is just like the More Rewards redemption option for international travel. It’s an additional choice. So what if the value per point is less? The customer can do the math and decide.

Here’s the problem. From the start, Southwest’s business model has been a fair travel deal, fairly presented and consistently delivered. Other airlines have resorted to baggage fees and other surprise charges, but Southwest has stood alone against all sorts of trickery. Ultra-loyal customers trust Southwest to provide a fair deal; they are the ones who will be least likely to check the redemption rates in advance. When these long-time fans discover what happened, they will feel betrayed. You can’t put a price on betraying customer loyalty.