Consumer View on Southwest’s Frequent Flyer Changes

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“Great for business travelers,” seems to be the trade’s reaction to Southwest’s new frequent flyer program, but it’s not bad for consumers, either. Here’s my take on the new program that will come into effect on March 1.{{{SmarterBuddy|align=left}}}

Basically, both the points you earn and the awards you receive are based on fares.

• The points you earn depend on what kind of ticket you buy and how much you pay. If you buy a ticket at the line’s least expensive “Wanna Get Away” fare, you get six points for every dollar you spend. If you buy a more expensive “Anytime” fare ticket, you get 10 points for every dollar you spend, and if you pop for the most expensive “Business Select” ticket, you get 12 points per dollar. And the points you earn no longer expire—a big plus over the current program.
• When you use points, you pay 60 points per fare dollar for a Wanna Get Away ticket, 100 points per fare dollar for an Anytime ticket, or 120 points per fare dollar for a Business Select ticket. And you can use points to “buy” tickets on any available seat, with no blackouts or limits—another big plus and a huge advantage over most competitive lines.

The reward schedule is extremely simple: When you use points to buy exactly the same tickets you bought to earn your points, you get one “free” trip for every 10 paid trips.

Here’s a real-world trip as a sample. Currently, for travel from Sacramento to Chicago in mid-February, the lowest Wanna Get Away fare is $139, the Anytime fare is $439, and the Business Select fare is $464.

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• Ordinary consumers, presumably, would earn points by buying Wanna Get Away tickets and use those points to buy award tickets at Wanna Get Away fares. A one-way ticket costs $139, earning 834 points; a round-trip award ticket for that route would require 16,680 points, or the equivalent of 10 purchased round-trips.
• At the other end of the scale, a Business Select ticket would cost $464 and earn 5,568 points, and a Business Select award ticket would require 55,680 points, again one “free” trip for 10 purchased trips.

You don’t have to be Sherlock Holmes to figure out that travelers who earn points by buying expensive tickets, but use points for cheap trips, make out big time: They get a free cheap ticket for two paid expensive tickets, with something left over for next time. Presumably, that will include lots of business travelers, the airline’s main target.

How does the new program stack up against the legacy lines? Typically, a low-level “free” trip in the contiguous 48 states requires 25,000 miles. To earn that many miles you’d have to fly seven round-trips between Sacramento and Chicago; even fewer if you can score assorted mileage “bonuses.” So the legacy line seems more generous. But 25,000 miles get you only a low-level award seat, typically anywhere from difficult to impossible to find. For a “sure thing” award seat, as you get with Southwest, you’d have to fly at least 14 paid trips. Southwest splits the difference. Obviously, the math varies by where you earn and where you go on an award.

Southwest also says that the new program covers international travel. But that’s “sort of.” If you use a Southwest credit card from Chase, you can apply those credit card points toward an international ticket on any airline. The points will have a cash value, and international travel will work out the same as it does with any “bank-buys” program. As with most such programs, they do fairly well for tickets in economy class, but are virtually worthless for premium travel or upgrades. Southwest and Chase haven’t yet posted full details, but my guess is that the program will be competitive with many bank-buys cards, but not as generous as such high-yield cards as Capital One’s Venture.

All in all, even with the bias toward business travelers, Southwest’s new program will interest the cheap-ticket set. Check it out on the Southwest website.