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July 27, 2014

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Southwest making changes to its frequent-flyer program

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Sun file photo

Southwest Airlines planes sit at McCarran International Airport.

Southwest Airlines is converting its popular Rapid Rewards loyalty program to a points-based system with accrual based on how much money a customer spends for a ticket.

The Dallas-based airline, the busiest at Las Vegas’ McCarran International Airport, is unveiling the new system today with the conversion scheduled to occur March 1.

Customers won’t lose credits they’ve accrued when the conversion takes place because Southwest will automatically convert credits to points.

Information on the new system is available at newrapidrewards.com.

“We’re looking at this as an extension of currency,” said Southwest CEO Gary Kelley in an embargoed media briefing Wednesday morning.

Under the new system, customers will accrue points whenever they buy a ticket on the airline’s website with higher multiples for higher levels of Southwest’s three-tiered pricing. For the airline’s “Wanna Get Away” fares — the least expensive tickets Southwest sells — customers will earn six points for every dollar spent.

For the second-tier “Anytime” tickets, customers earn 10 points per dollar spent. For the highest priced “Business Select” level, customers will get 12 points per dollar spent.

Southwest will continue to award points on transactions — one point for every dollar spent — with some of its partners, which include hotels and car-rental agencies.

When redeeming points for flights, 60 points equal a dollar, so a $100 fare would cost 6,000 points.

Southwest is making other changes that will surely meet with customer approval.

Unlike the existing system in which credits have to be accrued over a 24-month span to cash in for an award that has to be used within a year, point totals under the new system won’t expire as long as a customer makes a purchase at least once every two years.

Southwest also is bringing back its no-blackout policy. Any available seat on any flight will be available for purchase with points.

Southwest also announced that it is setting up a redemption system that will enable customers to purchase other travel through a third-party vendor.

Among the products customers will be able to buy with their Southwest points are tickets for international and Hawaii travel on other airlines, cruises, golf and spa packages.

The company said customers can redeem points for trips to more than 800 destinations, stays at 70,000 hotels worldwide and for gift cards with 45 vendors.

Redemptions for international travel and special packages will be tied to Southwest’s branded Rapid Rewards Visa card. The company and its bank partner, Chase Bank U.S.A., offer the card with a $60 annual fee. There are no plans to change that.

Customers won’t be able to mix points with cash on their transactions, but under the new system, customers will be able to buy points at a rate of $25 per 1,000 points with a minimum purchase of 2,000 points. That will enable customers who are close to meeting a transaction goal to buy enough points to do it.

Southwest’s most loyal customers also will get bonus points for transactions under the new system, which the airline has dubbed “Rapid Rewards 2.0.”

Rapid Rewards customers who qualify for “A-List” status — those who have purchased and flown 32 one-way trips within a year — will get a 25 percent point bonus on all transactions. A-List customers also will have a dedicated telephone line for inquiries and will have free access to inflight WiFi service that Southwest is in the process of installing on its planes.

Not everybody is likely to be excited with all the changes in the program.

Las Vegans who have accrued credits with short jaunts to Reno or Los Angeles under the program and collected 16 credits to earn a free round-trip flight and redeemed them for a big cross-country trip will find that their points won’t take them as far.

For example, it currently costs $149 for a round-trip flight to Reno on a “Wanna Get Away” fare. Under the current system, that would earn two credits — one-eighth of the way toward earning a free round-trip flight. Under the new system, that ticket would earn 894 points. After eight round trips to Reno, a customer would accrue 14,304 points.

But the cost of buying a ticket from Las Vegas to Orlando, for example, would be $343 for a “Wanna Get Away” ticket. At the redemption rate of 60 points per dollar, it would take 20,580 points to buy that Orlando ticket.

That means it would take 23 one-way trips between Las Vegas and Reno instead of 16 to get a ticket to fly to Orlando.

When Southwest transitions its program to Rapid Rewards 2.0, it will convert existing credits at a rate of 1,200 points per credit. For example, a customer with 14 existing credits under the current system will get 16,800 points.

Until March 1, Rapid Rewards card-holders will be able to accrue and use credits as they have.

“We want to give our customers the opportunity to absorb the changes and be prepared for the cutover on March 1,” said Ryan Green, Southwest’s senior director of customer loyalty and partnerships, in Wednesday’s briefing. “We think this provides more value and less hassle for our customers, and it’s completely transparent.”

Green said the most common frustration customers shared with the airline was over capacity restrictions and blackouts. The new system remedies that dilemma — at a price.

Southwest, like most airlines, price tickets based on supply and demand, so tickets during high-demand periods — such as around Thanksgiving and Christmas — cost more than they do in low-demand periods like midweek.

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  1. I like Southwest Airlines, and had been an "A-List" traveler on it since that program began. Unfortunately, another reduction in the value of the Rapid Rewards program will adversely affect customers like me.

    "Las Vegans who have accrued credits with short jaunts to Reno or Los Angeles under the program and collected 16 credits to earn a free round-trip flight and redeemed them for a big cross-country trip will find that their points won't take them as far."

    I believe Southwest has made a rare (for it) mistake by further cheapening and complicating what once was the best frequent flyer program in the industry.

  2. Yes, Southwest is and has been slowly reducing the value of what is they have to offer. The problem is, so is everyone else. This means that even though the value of your dollar on Southwest is going down, they still out compete everyone else, and they still have the best value. You cannot win, and they know it.

  3. Less for more. Now it's how much you spend per trip, not frequency or brand loyalty. Downside outweighs alleged positives by far on this one, Southwest, despite the spin.

  4. Southwest was a classic, one of the few corporations today that have a high customer-satisfaction rating.

    Southwest did things that pleased their customers. Something local casinos ought to learn from if they ever want to turn business around in Las Vegas.

    UNFORTUNATELY, Southwest Airline, as others have commented on, has gone to the everybody-else-is-doing-it attitude, so they are going to do it, too.

    Once you join the greedy, greed will come back and bit you in the back pew. Someone else will take your place.

  5. The main appeal for me to fly Southwest, in addition to free baggage, was their schedule. They are the only ones that fly nonstop to many cities I travel. Otherwise, I would not tolerate the nasty peanuts, the boarding system and the lack of first class. I do not like these changes to their frequent flyer program, but their schedule benefits outweigh the negatives.

  6. Southwest once featured the best rewards tickets, complimented by simplicity: Fly 6 round trips (12 segments), get a round trip free. SWA even boasted in ads about how easy and simple it was.

    Then it went to 8 round trips. Then to get a decent flight, you had to use TWO rewards tickets for each one-way flight ("upgrading" they called it).

    Then they changed their rewards offers through their SWA Visa. Instead of a segment credit for every $1000 in purchases, it was $1200. Then it was $1600.

    Now it's down to this downgrade, topped with an added layer of complexity to boot.

    We're done with the Southwest rewards program...

  7. The ones grumbling about the points system must be the ones who don't have to pay for their own flights.

    Dollar for dollar, peanuts to peanuts, Southwest is still the best in the business.

    Unless you want to pay 30% for the ticket to the same city on another airline because you get more miles??

    That's like the tourist who dumps $5 grand at the Mirage and cheers because they got a free room!!

    All of this is in advance of the new routes, larger (longer route) planes and other additions that will benefit Las Vegas and those who fly out of here on business.