New Southwest rewards program – does it make sense?

As you may know any airline with at least some self respect has a loyalty program for its customers. Some kind of a frequent flyers’ club.

Most of the airlines use awards system based on the range flown by the customer – miles (or points awarded based on the miles flown). For example, flying from San Francisco to Chicago got me 1846 miles in my United Mileage Plus club membership, which is also more or less the distance flown.

Southwest program was a bit different: they would award a point for each flight taken. Flight from San Jose to Los Angeles would bring me the same points as a flight from Los Angeles to Las Vegas (although the latter is much shorter). But that still makes some sense, as the airline is domestic only, and most of its flights are for pretty short distances (for a world-wide traveler like myself).

But recently they’ve changed their program. Now, the points awarded not based on how many flights I took or the distance I traveled, but rather based on how much I paid. Paid more – got more rewards. Paid less – got less rewards.

Does it make sense?

Well, consider the same flight from San Jose to Los Angeles. If I book tickets ahead of time, I can get a seat for $59, $175 or $190, for each flight. For the $59 seat I get 360 points. For the $175 seat I get 1750 points, and for the $190 seat I get 2280 points. But – that’s the same seat. They don’t have different classes of service, and they don’t even have assigned seating. The best I can hope for is being closer to being first in line to board, so that I can grab the seat I want. Or get a refund if needed (for $175 and $190) and a glass of beer (for $190). So what else do we get for the (much!) extra money? Points.

Almost any airline charges very high premiums for refundable tickets. Most of those, to the best of my knowledge, without giving you almost 5 times more points for the flight. The closest is British Airways that gives non-refundable ticket flyers 25% of the miles it gives to those with the refundable tickets in the economy class. Of the US domestic airlines I can’t think of any with similar award differences based on the fare paid.

So does it make sense? To Southwest it obviously does, they wouldn’t do it otherwise. This system encourages people to spend more on a product they could have gotten for much less.

For us as customers? No, no sense at all. What Southwest is doing here is telling us “we don’t want you bummers on our airplanes, we prefer rich people”. On United or American Airlines I get the miles based on how far I went with them, and that makes me want to fly with them not only as often as possible but also as far as possible. On Southwest, which competes with UA or AA, I’m encouraged to pay more while flying less. I will get more points out of a $190 ticket from Northern California to Southern California (because it is the most expensive ticket, with x12 multiplier), than out of a $219 ticket from Miami to Los Angeles which is the cheapest price on one of the flights I looked at.

On their TV ads, Southwest (rightly) ridicule other airlines for imposing fees on baggage that Southwest don’t have. Kudos for that. But when it comes to rewarding loyalty, and not just letting us fly with decent service, Southwest still have a lot to learn.

Enjoy your flights,

The Little Advisor

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