May 11, 2021

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Just Do Travel

Southwest Airlines devalues frequent flyer program points just as travel makes a comeback

3 min read

Southwest Airlines just made it a little more difficult for its loyalty program customers who “wanna get away” by devaluing its Rapid Rewards program credits so that more points are required to buy plane tickets.

The Dallas-based carrier on Wednesday devalued Rapids Rewards points by about 6.5% percent, meaning a flight that once cost 10,000 frequent flyer points will now cost about 10,650.

Southwest confirmed the change “to maintain that unique combination of value” from the program’s various benefits, spokeswoman Tiffany Valdez said in a statement.

Other airlines could follow suit after giving away points and miles over the last year, selling them at a discount or making other moves to entice customers to stick with frequent flyer programs even though they weren’t flying during the COVID-19 pandemic, said Zach Honig, editor-at-large of the travel news website The Points Guy, which wrote about Southwest’s move Wednesday.

Passengers walk past a Southwest Airlines plane at Sky Harbor International Airport in Phoenix, Friday, March 26, 2021. (AP Photo/Sue Ogrocki)

“Airlines have essentially minted points and miles during the pandemic to raise money,” Honig said. “My guess is that there is a significant glut of points and miles sitting in accounts right now.”

Many customers with canceled or suspended flights were encouraged at times to turn their travel vouchers and credits into frequent flyer points, adding to the number of outstanding miles in customer accounts.

Frequent flyer programs have grown in importance to airlines after several, including American and Delta, used their programs and credit card offerings as collateral on multibillion-dollar loans to raise liquidity to get through the pandemic. American used its AAdvantage program for $7.5 billion worth of backing on its federal pandemic relief loan. United used its program to obtain a $5 billion loan through private banks.

Southwest never put its frequent flyer program up for backing on a loan, but the airline has worked hard to keep its customer base. That has included extending frequent flyer status through the end of 2021 for people who earned it in 2019 and giving short-term “companion passes” to people who signed up for credit cards. A companion pass gives a free ticket to a flying customer’s buddy.

The carrier, along with competitors, has also sold points and miles in order to raise the cash it needed to get through the pandemic when liquidity was hard to find.

Unlike most airlines, Southwest bases its program points solely on the price of a ticket. Other airlines use a combination of factors to compute the value of miles and points, including distance, ticket type and partnerships with other airlines.

It’s rare for an airline to enact such an across-the-board change to a points or miles program, Honig said. The change was unannounced to customers, meaning travelers didn’t have a chance to buy tickets before the move took place.

Southwest last devalued its frequent flyer program in 2018, but in 2019 the company upped the requirement to get a companion pass, one of the most coveted perks for Southwest customers.

The glut of frequent flyer points and credits could be a major factor in coming months. Airlines have reported an uptick in new ticket sales in recent weeks, and carriers have responded by bulking up schedules for the summer. Just this week, Southwest launched service to Houston’s George Bush Intercontinental Airport and Santa Barbara International Airport in California.

And after a year in which U.S. airlines lost more than $35 billion, carriers will be looking to sell tickets for cash in order to return to making a profit.

Southwest Airlines passengers checks-in using a kiosk, background, at Dallas Love Field in Dallas, Thursday, December 1, 2016. (David Woo/The Dallas Morning News)

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