Update April 1, 2014: This post was written before Southwest’s massive devaluation. Now you need 70 points per dollar for Wanna Get Away? fares instead of 60. Now Rapid Rewards are worth about 1.45 cents each.

Southwest Airlines Rapid Rewards points are worth 1.69 cents per point. Unlike my calculation of the value of an Avios, the valuation of a Rapid Rewards point does not change based on where you live or your flying preferences because Rapid Rewards is a fixed-value award program. That means the number of points needed for an award is directly dictated by the price of the fare, and the number of points earned for flying a paid fare is directly dictated by the price of the fare also. The distance of flights and the regions in which the origin and arrival city are located are irrelevant to calculating Rapid Rewards points needed or earned.

Let’s go through the rules and parameters of the Rapid Rewards program, consider the strategy for maximizing the value of your Rapid Rewards points, and calculate the value of one Rapid Rewards point.

Important rules:

  1. Every award in the Wanna Get Away fare class costs 60 points per dollar of the base fare including excise tax. Other fare classes are available for awards for more points per dollar, but since Southwest’s flights are all operated with all-coach planes, there is no reason to book any awards except Wanna Get Away fares.
  2. All Southwest flights have open seating. Your boarding pass tells you the order in which to board, but not your seat. You can board earlier if you pay $10 extra when purchasing your ticket or if you purchase a more expensive fare class. Or you can check in online 24 hours before the flight and get priority over those who check in later.
  3. The only fee on Southwest award tickets is $2.50 per segment for the 9/11 security fee. There are no ticketing fees, no change fees, and no redeposit fees if you decide to change or cancel your ticket. Pleasantly, the Passenger Facility Charge and Segment Fee that are added to the base fare when purchasing with cash are not charged when booking an award ticket. (Nor are they included in the fare on which the 60 points per dollar award price is calculated.)
  4. Award availability is the exact same as cash availability. If a flight can be booked with cash, it can be booked with points. The only note is that Wanna Get Away availability disappears several days before departure.

Strategy to Maximize the Value of Southwest Rapid Rewards Points:

  1. If you cancel an award, the points are redeposited immediately, and any charges to your credit card for 9/11 security fees are reversed. Therefore if you know you want to book an award with Southwest, book it right now. If the price rises, you locked in the best fare and maximized the value of your points. If the price falls, you can cancel your original reservation and rebook at the lower price. If you don’t want to constantly be checking fares, then at least monitor Southwest’s amazing sales, which seem to pop up every few months and are announced by email, which you can signup for here.
  2. Book an award on Southwest when you’re flying with lots of bags. Southwest is the only airline that still lets you check two bags free each way. That will save you $120 roundtrip versus most legacy carriers.
  3. Book a direct route that only Southwest serves. Eschewing the hub-and-spoke model of most carriers, Southwest has a ton of direct point-to-point flights that have no competition. If you value your time, flying direct on Southwest is much more valuable than flying a route with a connection on another airline.

Examples of Southwest Awards:

1) LAX-PIT oneway connecting in LAS

  • Lesser of Price and Value: $221.60
  • Award Taxes and Fees: $5
  • Rapid Rewards Points Needed to Book: 12,000
  • Rapid Rewards Points Foregone by Not Purchasing with Cash: 1,200

2) LAX-PHX oneway direct

  • Lesser of Price and Value: $69.80
  • Award Taxes and Fees: $2.50
  • Rapid Rewards Points Needed to Book: 3,540
  • Rapid Rewards Points Foregone by Not Purchasing with Cash: 354

I think these are both pretty good cash fares, so I used price for “Lesser of Price and Value” in both cases. Plugging these values into the milevalue.com Mile Value Calculator nets values of 1.64 cents per Rapid Rewards point to Pittsburgh and 1.73 cents per point to Phoenix. For other awards, I got values between 1.57 and 1.75 cents per point. Why does this fixed-value program not have a fixed value per point? It’s that quirk I mentioned above of not charging award passengers the Passenger Facility Charge and Segment Fee and also not charging award passengers points equal to the dollar amount of those fees. What it means is that you’ll get a slightly higher cents per point booking cheaper flights.  I’ll take the middle end of the range and value Rapid Rewards points at 1.66 cents per point for now. The final step in the valuation is to compare Southwest awards to flights purchased with cash in order to come to a final valuation.

Southwest Awards Compared to Buying with Cash:

Buying an award with Rapid Rewards points on Southwest is exactly the same as buying a flight with cash except for two things. The first is that awards don’t have the Passenger Facility Charge or Segment Fee. I mentioned that above, and that’s already been factored into the valuation, so I’ll ignore it here, so we don’t double count it. The second difference is that if you pay with cash then cancel, you don’t get cash back. You get Southwest credit for a future flight. Obviously cash is slightly more valuable. If you cancel an award redemption, you get back the exact points you put in, so you’re in exactly the same position as before the redemption. Advantage award redemption. The difference is slight, but I will increase my valuation from 1.66 to 1.69 cents per Rapid Rewards point because of it.

Southwest Airlines has a very different frequent flier program than the legacy carriers, so exploiting it requires a different approach. As we’ve seen the key is to find good deals in cash and book those flights with points. Southwest’s policy of allowing award redeposits free of charge makes that easier, so everyone should be able to wring 1.69 cents out of every Rapid Rewards point.

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