Last week, Southwest quietly let it slip that it was going to vary the number of points required to redeem for flights. This wasn’t something I was going to write about, but after giving Delta a Cranky Jackass for making a move toward less transparency, I decided I couldn’t let this one drop.
This move doesn’t deserve a Cranky Jackass award, because Southwest isn’t hiding the change. Near the top of a recent update mailed out to members, Southwest said this.
Beginning April 17, 2015, the number of Rapid Rewards Points needed to redeem for certain flights will vary based on destination, time, day of travel, demand, fare class, and other factors. However, there are still many flights which will stay at the current redemption rate.
Of course, that doesn’t mean I like this. It just makes it hard for people to know what they need to save in order to use their points. And that sucks.
A couple years back, Southwest changed from its completely simple program (fly x times, get a free ticket) to a revenue-based system. The idea was you’d earn points for the amount of money you spent with the airline. But then unlike what Delta and United have done, Southwest also tied point redemptions to the value of what a paid ticket would cost for that seat.
When it launched, the math was simple. If there was a Wanna Get Away discount fare selling, then multiply that dollar amount by 60 and you’ll know how many points you need. A year ago, Southwest decided that was too generous so it bumped the multiple up to 70 points. Anytime fares cost even more.
This does make it tough to save up exactly how many points you need for a trip since you don’t know how much the fare will be on each flight. But it’s a simple program, and you can get an idea of what you need based on the fares you see in the market over time. It’s at least fair to put something out there that’s so clear.
But now Southwest has gone and mucked it all up. We don’t even really know how much it’s been messed with because Southwest won’t say. What we do know is this, which I got from a spokesperson at the airline.
Southwest Airlines has slightly increased the number of Rapid Rewards Points needed to redeem flights. The number of points needed will vary based on destination, time of day, demand, fare class, and other factors, though, in many cases, the current redemption rate will remain the same.
Ok, so it is increasing “slightly” on some routes and on some days and some flights. But that’s pretty vague. I pushed back to get more detail and this is the best I could get.
It would be impossible to summarize how the displayed prices to consumers vary between BUR and LAX (or between any two airports for that matter), because each flight’s inventory is individually managed, and a fare filed in BUR may not be the same fare filed in LAX (and vice versa). Further, both parameters are subject to frequent changes (inventory can change instantly in real time; filed fares can change up to 4 times per day). In addition, our service offering (number of flights, nonstop routes, connect opportunities) between the two airports may not be comparable. In the same way that it’s often more expensive to book a flight to New York vs. Albuquerque sometimes point redemption will vary based on what I referenced in the statement: destination, time of day, demand, fare class, and other factors. But I can’t reemphasize enough that in many cases, the current redemption rate will remain the same.
I think it’s safe to say that I understand how airline pricing works. But that’s the whole point of tying point redemptions to fare levels. You can handle the revenue management piece on fares and then just piggyback on that work with a fixed point value. It’s not like Southwest wasn’t managing redemption levels between Burbank and LA before. If demand was higher in LA, then the fare would be higher. So would the redemption cost.
What I read into this is that Southwest is seeing certain routes that have higher levels of redemption than others. The team over there doesn’t like it. So to cull redemptions, the airline is adding a secondary level of revenue management on the points themselves. Maybe that’ll push more people to Burbank.
That sounds great from a supply and demand perspective, but it seems to me that airlines are losing sight of what loyalty programs are supposed to do. Forgetting about the whole elite program issue, loyalty programs are supposed to reward people for traveling with the airline, and it’s not an instant reward. Instead, it’s something people can save for over years of travel. But when the end goal keeps moving, it’s really hard to justify any loyalty.
