## The new true value of Southwest points

Recently, Southwest devalued their rewards program a bit by increasing the number of points required for “Wanna Get Away” fares.  They used to charge 60 points per dollar for these fares, but now they charge 70.

On the surface, it looks like Southwest reduced the value of their points from 1.67 cents per point to 1.43 cents per point.  However, as I’ve shown before, calculating the value of Southwest points is not as straightforward as it seems.  With each fare, there are taxes and fees that are not part of Southwest’s award calculation.  In other words, the points required for an award flight are less than you would expect based on the overall fare.  Of the taxes and fees included in a paid fare, only the TSA security fee is charged on awards.  The result is that the value you get from Southwest points is higher than the value that can be calculated directly from the awards points per dollar chart (shown above).

Southwest offers three fare levels, named “Wanna Get Away”, “Anytime”, and “Business Select”.  Each of these fare levels has a different point cost for award flights.  If you book an award seat at the Wanna Get Away level, you’ll pay 70 points per dollar.  Anytime awards cost 100 points per dollar.  And, Business Select awards cost 120 points per dollar.  If not for the taxes and fees issue I described above, this would lead to the following valuations:

• Wanna Get Away: 1.43 cents per point
• Anytime: 1 cent per point
• Business Select: .83 cents per point

### Observed Valuations

In order to find out the true value of points (with taxes included in the calculations), I ran dozens of flight searches and recorded the paid prices and award prices within each fare level.  For each flight and fare level, I calculated the point value as follows: (paid fare – award fees) / points.  Since results varied a bit from flight to flight, I then computed the minimum and maximum point value for each fare level.  Here were the results:

• Wanna Get Away: Between 1.61 and 1.69 cents per point
• Anytime: Between 1.11 and 1.13 cents per point
• Business Select: Between .92 and .94 cents per point

### Enhanced Valuations

If all you care about is the cost avoided for a particular flight by using points, then the valuations presented above should work well for you.  However, the analysis above doesn’t consider the fact that points would be earned on paid flights but not on award flights.  So, using the same data as above, I recalculated point values with a new formula that takes the loss of point-earnings into account.  Specifically, I counted the points lost by not paying for a flight as part of the overall point cost for an award.  That might seem strange, but consider this example: One flight I looked at cost \$237 and would have earned 1200 points.  The alternative was to redeem 14000 points and \$5 for the award.  The person who pays for the flight ends up 15,200 points richer and \$232 poorer than if he or she had booked the award.  So, we can calculate the point value, in this example, as \$232 / 15,200 = 1.53 cents per point.

With this enhanced valuation method, I found the following point values:

• Wanna Get Away: Between 1.48 and 1.56 cents per point
• Anytime: Between 1.01 and 1.03 cents per point
• Business Select: Between .84 and .85 cents per point

Personally, I think that this second method provides more accurate estimates of Southwest point redemption values.  We can simplify a bit, by taking the average (mean) value I found (rather than the min and max):

• Wanna Get Away: 1.53 cents per point
• Anytime: 1.01 cents per point
• Business Select: .84 cents per point

The irony of these results is that, with the exception of Wanna Get Away fares, we end up with almost the exact same valuations that we started with when doing straight-up calculations based on points per dollar.  That said, the best value of Southwest points is clearly to use them for Wanna Get Away fares.  For those fares, 1.53 cents per point is a better estimate of value than 1.43.

#### About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

More articles by Greg The Frequent Miler »

0 Followers

Most reacted comment
8 Comment authors
Recent comment authors

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Subscribe
Notify of
Guest
Steeler

I love it!!

I’ve felt so guilty focusing spending on my SWA card for years, I feel a whole lot better now.

Might you be able to share how the numbers would look using my companion pass as 90% of my flights my companion flies with me?

Guest
PSL

Booking a flight with points certainly gives you more flexibility if the price is reduced – you get points refunded on the difference instead of cash which must be spent within a year after the flight was initially booked. That’s the real beauty of Southwest points.

Guest
greek2me

@PSL and @FM- I agree. I did the same analysis as Greg did applying 70 pts/\$ to all my past flown Southwest flights and came up with similar values after deducting loss of pts earned on award flights, then I bumped my value of Southwest pts back up to 1.6cpp for the benefit of fully refundable awards when using pts (vs 1 yr expiration of cash credits returned when canceling paid flights).

Guest
greek2me

FYI- I was using 1.9cpp before the deval.

Guest
Jackie

Do you use the same valuation/ formula for rental car bonuses? We’ve primarily used Alamo for cars as they have good rates plus bonus rewards. I’m not sure how to value to bonus rewards when comparing to another Alamo rate (Costco) where you only get 600 base miles. I may be making this more difficult than it should be.

Guest
UAPhil

I value the “fully refundable” feature more highly than some others. To me it’s valuable to be able to book flights when you’re not sure of your plans, then get a full “no strings attached” refund if needed.

(“No change fees” on revenue bookings is nice, but there are still several “gotchas” with reusing revenue flight credits – travel must be completed within a year, only the original traveler can use the credits, and if you combine credits and new money in a booking, the ENTIRE fare value expires when the oldest credit expires. Example – you have a \$69 credit that expires on July 31; on July 1 you use it as part payment toward a \$400 fare. Now the ENTIRE \$400 expires on July 31 – just 30 days later.)

[…] Southwest Airlines has no change fees.  There’s very little risk in buying a ticket since you can make changes to it anytime before departure.  The only small risk is with cancelling tickets.  Southwest will refund your money in the form of airline credit that must be used within 12 months.  The risk then is that you may not ending up using that credit unless you fly Southwest often.  A better solution is to use points to book a Southwest flight.  Flights paid for with points are fully refundable.  And, if you use points for a “Wanna Get Away” fare, you’ll get decent value from your points (see “The new true value of Southwest points”).  […]

[…] points are currently worth more than 1.5 cents per point towards Wanna Getaway fares (see “The new true value of Southwest points”).  So, your \$1,551 investment would be worth more than \$1,661 in travel.  In other […]

[…] for 1,800 Rapid Rewards points. These Rapid Rewards points have themselves been devalued, but The Frequent Miler still assigns them a value of roughly 1.65 cents each. By re-working the chart above, we see that we can purchase Choice Privileges points and transfer […]

[…] is it: Even without the companion pass, 110,000 points will result in a lot of free travel.  As I’ve shown before, Southwest points are worth between 1.5 and 1.7 cents each towards travel (assuming you always book […]

[…] dollar in value on Southwest point redemptions.  Frequent Miler found these typically return over 1.6 cents per dollar in value. That would be about 29% […]

[…] dollar in value on Southwest point redemptions.  Frequent Miler found these typically return over 1.6 cents per dollar in value. That would be about 29% […]

[…] 111,000 Southwest Rapid Rewards points worth approximately \$1698 in airfare.  This is based on my estimated Southwest point valuation of 1.53 cents per point (found here). […]

[…] exists on the operating carrier. They can be transferred to Southwest Airlines and redeemed for up to 1.69 cents each on Wanna Get Away fares. Likewise Seth the Wandering Aramean recently showed that Hyatt Gold […]

[…] 110,250 Southwest Rapid Rewards points worth approximately \$1687 in airfare.  This is based on my estimated Southwest point valuation of 1.53 cents per point (found here). […]

[…] the award price for Wanna Get Away fares from 60 points per dollar to 70 points per dollar (see: The new true value of Southwest points).  They also stopped publishing the above chart at around that time.  Now, just over a […]

[…] Southwest points are usually worth a bit more than that when used for Wanna Getaway fares (See: The new true value of Southwest points).  Keep in mind, though, that Southwest is no longer promising a fixed redemption value for their […]

[…] Rapid Rewards points for a total cost of \$26.50.  That comes to 1.3 cents per point.  Since Southwest points are generally worth about 1.5 cents each towards Wanna Get Away fares, that’s not bad at all!  Plus, in the past, points earned from this […]

[…] Southwest points are worth about 1.5 cents each towards Wanna Get Away fares, this is a good deal even if you don’t ascribe any value to the flowers.  This is not a […]

[…] points are worth about 1.5 cents each towards Wanna Get Away fares (see: The new true value of Southwest points).  Note that Southwest no longer promises to offer all Wanna Get Away fares for 70 points per […]

[…] Rewards points are usually worth about 1.5 cents each towards Wanna Get Away fares (see: The new true value of Southwest points).  With the Companion Pass in-hand, you can add a companion to your award flight for free (not […]

[…] found in the Frequent Miler post “The new true value of Southwest points,” observed values of Rapid Rewards points when used for Wanna Get Away fares ranged from 1.61 […]

[…] 1 Southwest point is worth about 1.6 cents towards Wanna Get Away fares, but Greg has since re-tooled his valuation for Southwest points to 1.53 cents. That’s the number I used for the above valuation. This can vary a bit. Values are […]