Updated January 10th, 2020
Southwest offers what might be the most hassle-free loyalty program in the entire world, Rapid Rewards. It’s so reliable, that we’re deviating from our standard 25% reduction factor, and only using 10. Rapid Rewards are that easy to use. There are very few companies left in the world that don’t play games and hide behind fine print. Thankfully, along with Costco, Southwest Airlines is one of those.
There is one problem though, this reliability comes at a cost; the near-absence of high-value award opportunities. Southwest primarily operates a domestic network, only flying limited international routes. As a result, the >5¢/mile valuations seen elsewhere do not exist. After the dust settled, we assigned an ACRV of 1.23¢ per Southwest Rapid Reward mile.
|Current||Previous Period||$ Change||% Change|
|Intra-US Non-Zero Average||1.49¢||0.87¢||+0.62¢||+71%|
|International Non-Zero Average||1.24¢||0.58¢||+0.66¢||+114%|
Subjectively, we would value Southwest Rapid Rewards more than our formula suggests they’re worth. Extras like free baggage and itinerary changes are worth something, but at this time not factored into our model. Maybe some day.
What the table above, and chart below illustrate, is that it IS possible to exceed Southwest’s own 1.5¢ per mile booking rate. At least on a Points Reckoning ACRV basis. How can this be?!? Well, as it turns out, all low-price cash alternative data comes from Google Flights. In some cases, the published Southwest cash fare is lower than those published by Google. In this case, we’ve got a flight between San Francisco and Atlanta. Southwest offered a ride for just 2,524 Rapid Rewards + $5.60 in fees. The lowest-priced cash alternative(per Google Flights) was $127, providing a great redemption of 4.81¢ per mile.
Southwest Rapid Rewards is an outlier in the US Domestic carrier space. Solid reliability vs. award potential, no baggage fees vs no premium cabin possibilities. Those looking for a hassle-free award booking experience, look no further. For those looking to maximize the value of their Chase Ultimate Rewards, United, Air France/KLM or World of Hyatt are better options.