Who Will Luv the New Southwest Rapid Rewards Program?

I admit it, like most Southwest flyer's I was completely up in arms when I heard about the new Rapid Rewards program.  After all, just a few months ago I wrote about how much I loved the old program.  Why on earth would our beloved Southwest trade in the most user friendly reward system in the industry for one that requires an Excel spreadsheet to figure out?  The hard answer is that they did it to give greater rewards to the customers who pay higher fares and fly more often.  See below as I walk you through the new program, compare it to the old program, and show you the winners and losers.

Earning Points 

First of all, the Rapid Rewards Credits are a thing of the past.  They’ll be around for the transition, which I’ll discuss later, but in the future they are gone.  Now, you will earn “points” that are based directly on three very important factors:  the cost of the ticket, the type of fare you buy, and your elite status. 

1. Cost of the Ticket:  Flight segments are no longer important, and miles don’t count for anything either.  All of your points will be based directly on how much you spend on each ticket.
2. Type of Fare:  Southwest offers three different fare types:

• Wanna Get Away Fares:  These are the least expensive fares and usually require advance booking. You will earn 6 points per dollar spent booking these tickets.
• Anytime Fares:  These are full price tickets that are available anytime.  You will earn 10 points per dollar spent booking these tickets.
• Business Select Fares.  These are usually about 5-10% more expensive than the Anytime fares.  Business Select allows you to board the plane early and have a free alcoholic beverage.  You will earn 12 points per dollar spent on these fares. 

      3.  Your Status:  Southwest will expand into a two-tiered A-List elite system.

• A-List Status:  If you fly 25 segments or earn 35,000 points within one calendar year you will become part of the A-List.  A-List members get a 25% point bonus on all bookings.
• A-List Preferred:  If you fly 50 segments or earn 70,000 points within one calendar year, you will become a part of the A-List Preferred.  A-List Preferred members get a 100% point bonus on every fare they book.

Earning Points in the New Southwest Rapid Rewards Program

	If You Are A…
	Normal Person		A-List Member	A-List Preferred
And you book a…
Wanna Get Away Fare	6 Points per $1	7.5 Points per $1		12 Points per $1
Anytime Fare	10 Points per $1	12.5 Points per $1		20 Points per $1
Business Select Fare	12 Points per $1	15 Points per $1		24 Points per $1

Southwest Airlines Rapid Rewards Visa Card – Last Chance for a Free Ticket

If you haven’t yet applied for the Southwest Airlines Rapid Rewards Visa Card, you may want to consider it now.  The card is still offering a FREE Standard Award Ticket after you make one purchase.  The ticket will be valid for one year from the date of issue, just like the good old days! Also, when Southwest introduces its international flights and partners later in the year, only Southwest Credit Card holders will be eligible to use points for international flight awards.

In the new program Southwest will offer a choice of two cards: the $69 Annual Fee Plus Card, and the $99 Annual Fee Premier Card.  On both cards you will still get 2 points for every dollar you spend on Southwest flights, regardless of the fare class booked or your elite status.  The Plus Card will give 3,000 bonus points per year and the Premier Card offers 6,000 bonus points per year.    Points earned on either card will still count towards a Companion Pass, however, only the Premier Card allows you to earn points towards A-List Membership.  With the Premier Card you'll earn 1,500 A-List Qualifying points for every $10,000 you spend, with a maximum of 15,000 A-List points per year.    For more information on the credit card you can click here.

Using Points

Now that you’ve broken out the calculator and figured out how many potential points you can earn, don’t put it away just yet.  Redeeming your points requires some calculations as well.  The good news is that when it comes to using points, everyone is considered equal.  Here is how you cash in your points:

Cashing in Your Points in the New Southwest Rapid Rewards Program:

	If You Are A…
	Normal Person	A-List Member	A-List Preferred
And you buy a…
Wanna Get Away Fare	60 Rapid Rewards Points = $1 Off of the Fare
Anytime Fare	100 Rapid Rewards Points = $1 Off of the Fare
Business Select Fare	120 Rapid Rewards Points = $1 Off of the Fare

You can use your points as cash towards any ticket, but you do need to wait until you have enough for the entire ticket.  The phone agents are still a little confused on this one.  Some will tell you that you can purchase the difference, but what they mean is you can purchase points to make up the difference.  Southwest will sell you a minimum of 2,000 points for $50, and then it's $25 per 1,000 points after that.   

There are no blackout dates, no capacity restrictions, and your points will not expire as long as you have some kind of account activity every 24 months.  The old program required you to earn a new ticket every 24 months, or you would start to lose your credits.  This is a distinct advantage of the new program for people who only fly Southwest a few times a year.

The Old vs. The New – Who are the Biggest Winners and Losers?

Biggest Loser:   Non-Elite Short-Haul Flyers Booking Wanna Get Away Fares
Old Program In the old system these people were the biggest winners.  You could fly 8 short-roundtrips from Dallas to Houston for $150 each and earn a free ticket anywhere Southwest flies.  Let’s say that free ticket was worth $400.  You would’ve spent $150 x 8 = $1,200 and gotten $400 back.  That’s a 33% return.	New Program Now, that same $1,200 will earn you 7,200 points worth only $60-$120 depending on the type of ticket you redeem the points for.  Now your return has gone from 33% down to 5-10%.  Ouch!

Biggest Winner:   A-List Preferred Members who book Long-Haul Anytime Fares
Old Program In the old program these people were the biggest losers.  If you flew cross country 8 times for $400 each way you would spend $3,200 before you could redeem a $400 ticket.  That’s a 12.5% return.	New Program That $3,200 is going to net you 64,000 points worth between $533 - $1,066.  Your return just went from 12.5% up to 17-33%.  Finally you’re getting rewarded for those long expensive flights.

(Click here to run your own numbers using our custom Southwest Rewards Calculator)

As you can imagine, it’s all those frequent business travelers booking the $400 fares where Southwest makes the majority of its money.  Given that, it becomes pretty clear that Southwest completely flipped the program to give the biggest spenders superior benefits at the expense of the broader customer base.

I suppose I shouldn’t really be upset about it.  After all, every other airline does it.  They say it is good business to reward your highest revenue customers.  But the thing that used to make Southwest so special was how it treated everybody the same.  It didn’t matter if you were the CEO, or you washed the CEO’s car, you were still lined up right next to each other on a first come first serve basis.  It’s kind of sad to see that era come to an end.  But I guess change is inevitable, so here’s what you’ll need to know to get through the transition.

Transition

The new program takes effect on March 1, and there will be a transition period until December 31^st.  It’s a little tricky depending on what your status is, so I’ll break it down by Regular Folks, Current A-List and Companion Pass Holders, and Aspiring A-List and Companion Pass holders.

• Regular Folks:  Let’s say when March 1 rolls around you have 10 credits in your account.  Those ten credits stay there and you start earning points.  During the transition period, you can turn every 1,200 points you earn into 1 Old Rapid Rewards credit.  This means that you’ll just need to earn 7,200 points (before any of the old credits start to expire) to convert into 6 old credits to complete your 16 credits and get a Standard Award.  If you’ve already earned or booked an award, nothing changes.  You can still use the old awards as usual.
• Current A-List and Companion Pass Holders – If you’re in the A-List then you’ll stay in the A-List and may even qualify for A-List Preferred.  If you have a Companion Pass that expires after March 1, then you just scored big time because it will be extended until December 31.
• Aspiring A-List – A huge difference in the program is that now you have to earn A-List within a calendar year instead of any rolling 12-month period.  This is a definite downgrade in the program.  At least all of the flight segments you fly in January and February will still count towards 2012 A-List.  Once March 1 rolls around, you can qualify under either the old program or the new program depending on what is easiest.  For example:  If you have 10 segments in Jan-Feb, you will only need 22 more segments from March – December 31 to qualify under the old 32 segments qualification rules.  If you only flew 5 segments in Jan-Feb, then you can qualify under the easier new rules of 25 segments or 35,000 points between March 1 and December 31.
• Aspiring Companion Pass – The Companion Pass also now requires you to earn 100 credits or 110,000 points all within one calendar year instead of a rolling 12-month period.  All of your Jan-Feb credits will count towards 2012 Companion Pass qualification.  After March 1, every segment will continue to count as one credit, and every 1,200 points earned through partners will also count as one credit towards your goal of 100.

Hopefully this has cleared up some of the confusion for you.  If you want a more detailed comparison of the old program against the new program, you should read New Southwest vs. Old Southwest Rapid Rewards.

The direct link to Southwest for this information is:  http://www.southwest.com/newRR.

What do you think of the new program?  Let me know and don’t be shy…