Update 10/13/14: Southwest awards now cost 70 points per dollar of the cash fare instead of 60. Taxes are now $5.60 per direction within the United States instead of $2.50 per flight. Everything else is the same.

The other day I helped a friend book a roundtrip Southwest award from Los Angeles to Denver for 11,761 Rapid Rewards and $5, taking advantage of a 1,000 Ultimate Rewards transfer to make up a shortfall of points in her account. For some people, this post will be very basic. But this post touches on some topics of interest to all, including the valuation of Southwest points–not 1.67 cents as commonly thought.

Most of my friends know that I am miles obsessed–perhaps because I wear MileValue tank tops and t-shirts to dodgeball pretty frequently. They generally combine jealousy of my trips with indifference or skepticism toward my methods. I only hear from them a few weeks before a trip: “How can I get a cheap ticket from XYZ to ABC in a few weeks?” I always suggest using kayak.com, and applying for a credit card now for their next trip.

So when my friend Allison said she wanted to go from LAX to Denver in a few weeks, and she had Southwest points, I was happy to help someone whom I could actually help. We signed into her account, and she had 11,659 Rapid Rewards. That’s about $200 worth of travel, so we searched for flights to see what we could do.

Rapid Rewards Primer

Southwest has a very different frequent flier program than the legacy carriers’ programs you may be more familiar with. Southwest has a revenue based program. Purchased Wanna Get Away fares earn 6 Rapid Rewards per dollar of base fare plus excise taxes. (10-12 if you buy a more expensive fare type.) Then you can use those points on any Wanna Get Away fare at a rate of 60 Rapid Rewards per dollar of base fare.

That means that the program basically amounts to a 10% credit on purchased fares, which can be used on future flights.

The 60 Rapid Rewards per dollar formula also means that you can score domestic awards for way fewer than 25,000 miles, the rate that the American legacy carriers charge. A $100 roundtrip from Los Angeles to Las Vegas would be fewer than 6,000 miles.

And I want to mention as many times as I can that Southwest domestic awards are temporarily capped at 19,200 points per roundtrip, subject to availability, because of a trick that exploits Southwest’s merger with AirTran. See How to Exploit the Southwest-AirTran Merger. This trick is useful when roundtrips are over $330 or so. It was not useful in Allison’s case.

How to Book a Southwest Award

Once signed into your account, perform a regular flight search on the home page, typing in your cities and dates.

On the results screen, you can toggle between seeing fares in dollars and seeing them in points.

If you’re happy with the prices or your dates are inflexible, you can choose the best flight for you. If you are flexible, click on the dates above the results for the fares on those dates. Or click Try our Low Fare Calendar to see a month-long view.

The total price of Allison’s preferred flights was 11,761 Rapid Rewards and $5. Allison only had 11,659 points, so she needed 102 more.

Southwest sells points directly for 2.5 cents per point with a minimum purchase of 2,000 points for $50.

This might be a decent deal if you need to top off for an award, and you have no other options. But in general 2.5 cents for a Rapid Reward is steep.

Luckily, there is a better option. Chase Ultimate Rewards transfer to Rapid Rewards instantly at a 1:1 rate. After clicking on your Ultimate Rewards balance after signing into your Chase account, select a transfer to Southwest.

Ultimate Rewards can be transferred instantly to your Rapid Rewards account in increments of 1,000.

The points transferred instantly, and we ticketed the award in a matter of moments.

For 11,761 points and $5, she had her flights to Denver booked. For comparison, the cash ticket on the same flights would have cost $217.60.

And here’s how that $217.60 breaks down:

Only $196 was the base fare plus the excise taxes. $5 was the 9/11 Security Fee. The rest was Segment Fees and Passenger Facility Charges. From taking a close look at Southwest award pricing in previous posts–see How Much is a Rapid Reward Worth?–I know that the award price is calculated as 60 times the base fare plus excise taxes. 11,761 points equals 196 times 60 (plus a phantom 1 that seems to be a part of all the awards I price on Southwest.com lately.)

Here’s where some confusion occurs. Rapid Rewards are often valued at 1.67 cents because 60 of them equals $1 of flying. But awards don’t include some fees and charges that cash tickets do include, and that valuation doesn’t take into account that paid flights don’t earn points.

For Allison’s flight 11,761 Rapid Rewards + $5 equaled a cash ticket that cost $217.60 and would have earned 1,176 Rapid Rewards. Typing those numbers into the fields of the MileValue Mile Value Calculator, we find that she earned 1.64 cents per point from her award. (Plug in 217.6, 5, 11761, 1176.)

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In general, the way to get a higher CPM on Southwest flights is to book cheaper awards where the avoided Passenger Facility Charge and Segment Fees represent a higher proportion of the ticket cost or to use the merger-exploiting trick previously mentioned.

But Southwest points are very close to being fixed in value, so I recommend using them for domestic flights when Southwest has the cheapest fare, and you don’t need to earn status miles on a legacy carrier. Or when you need to check two bags each way, since those fly free on Southwest.

Recap

Booking an award on Southwest is very easy since all Wanna Get Away fares can be purchased as awards at a price of 60 times the base fare plus excise taxes. Awards are made even easier by the fact that you can top up a deficient Rapid Rewards account with instant transfers from an Ultimate Rewards account.

Southwest points aren’t completely fixed in value. You get a little more value out of awards on cheap fares and awards that are capped at 19,200 points than you do out of $200 to $300 fares.

If you have the chance, help a friend or family member book an easy award. It’s easy for you, but not for them. You can make someone’s day, and hopefully convert them to the miles religion. If more of your friends have miles balances like yours, you can have more companions on your next trip!

 

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