Anatomy of an Award: Southwest Airlines. Exploiting the Airtran-Southwest Merger

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This is the another post in my Anatomy of an Award series, in which I take a real award I’ve booked and break it down step-by-step to elucidate the award booking process. If you have a real award you’d like to write up in a similar post, please contact me, and you can write a guest post.

I am going to the Chicago Seminars for frequent fliers, being held October 12-14 at an O’Hare Airport hotel. Having some friends in Chicago, I wanted to arrive October 11 to go out in the city with them one night before the conference. Having been to Chicago once, I know that Midway Airport is connected to the city via the ‘L’ Train, so I wanted to fly into Midway to get to my friends in the city easily.

The only airline that flies direct flights to Midway from Los Angeles is Southwest. A few weeks back, I wrote a post that explained in detail how to exploit the Southwest-Airtran merger. The upshot is that the merger presents an arbitrage opportunity. Whereas before the number of points needed for a roundtrip Southwest award was uncapped and equaled 60 times the base fare, for a limited time the number of Southwest points needed for a roundtrip fare is capped at 19,200 points.

Why? Because you can currently transfer 1,200 Rapid Rewards (Southwest) points to 1 A+ (Airtran) credit, and 1 A+ credit to 1 Rapid Rewards credit. Since 1,200 RR points can become 1 RR credit, and 16 RR credits is enough for a free roundtrip or two free oneways, 19,200 RR points is enough for a free roundtrip. The only hitch is that awards that derive from 16 RR credits require you to find award space in much the same way that most airlines require a flight to have award space for you to book an award on the flight.

The question I faced was: Am I better off using my RR points to book the LAX-MDW oneway, or am I better off converting the points to credits? One wrinkle is that while 16 credits gets you two free oneways, 8 credits gets you nothing, so I’d have to prepurchase two free oneways with my points even though I only wanted one for this trip. (I wanted to return from O’Hare since the conference is there.) Luckily I have another oneway I want to take on a Southwest award from Tampa to Burbank next February, so getting two now is not a problem since they are good for one year.

Since half of the 19,200 points I’d need to convert into two free oneways is 9,600 points, I only wanted to convert points to credits if the LAX-MDW flight I wanted cost more than 9,600 points. I needed a mid-morning direct flight to Midway, and the price was over $200 in cash and 11,580 points, well above the 9,600 points it would cost if I converted to credits.

It was time to convert points and book a Southwest award. I’ve made a video of this, which you can see here, or you can continue reading with screen shots.

I signed into my Southwest account, and clicked My Account.

Once you’ve clicked on that, you have to click on the My Rapid Rewards tab.

Now click on transfer between A+ Rewards and Rapid Rewards.

At this point, you’ll have to sign into the A+ Rewards login box on the next page or sign up for the program.

Now that you’re signed into both accounts, you can transfer. You need 16 Rapid Rewards Credits to get anything. And that anything is two free oneways. Subtract the sum of any Rapid Rewards Credits and A+ credits you already have from 16. Now multiply how many short of 16 you are by 1,200. That’s how many points you need to transfer to A+ credits. Example: You have 2 RR credits and 3 A+ credits. You are 11 short of 16. 11 * 1,200 = 13,200, so you need to convert 13,200 points to 11 A+ credits. Below is the screen on which you convert the points to credits.

Once you’ve done that, you’ll come to a confirmation screen. Where it asks what you’d like to do next, click Transfer More Points, Credits, or Awards. Now you have to select to transfer your newly minted A+ credits to RR credits.

Once you have 16 RR credits, they disappear and are replaced by a Southwest award, which is two free oneways, which you do not have to book at once.

You can now call 800-I-FLY-SWA or book the awards online. Here’s how to do it online:

Click on the My Rapid Rewards tab again as shown in the second screen shot. Click on View My Old Credits and Awards as shown in the third screen shot.

Find the tiny link for View Awards:

If you have any awards there, you can click Book a Flight. After filling in your dates and airports, you are taken to a screen showing which itineraries are available for awards. In my experience, most flights from LAX are available as awards. See for yourself:

Almost all of the flights you could buy with cash or points are also available on an award. My preferred flight was too, so I selected it and booked it for $2.50.

Here is some info about the booking:

LAX-MDW cost: $204

My subjective value of the LAX-MDW: $204, would have paid cash if necessary

Rapid Rewards points price: 11,580

Rapid Rewards points used to get 1/2 an award: 9,600

RR points saved by converting to credits to an award: 1,980 (worth $33.46)

Total taxes and fees: $2.50

Points foregone by not purchasing itinerary: 1,158

Cents per mile as booked: 1.87! according to the milevalue calculator. (I plugged 204; 2.5; 9600; 1158 into the calculator. Do you see why?)

I’m pretty excited, since many people think that Southwest operates a fixed-value program with points worth 1.67 cents. While you can transfer points to credits, 1.67 cents is a minimum value for points, not a fixed value!