New Year, New Southwest Points: How the Airline's Upcoming Program Devaluation Will Affect You

New Year, New Southwest Points: How the Airline's Upcoming Program Devaluation Will Affect You - - Earning Points Will Get Harder

Southwest's upcoming program devaluation will make it more difficult for flyers to rack up points. Starting March 1, 2023, the airline is gutting its Rapid Rewards program by reducing the number of points earned on paid flights by roughly 30%.

This change has major implications for frequent Southwest flyers who depend on points earned from travel to fund future award bookings. Under the current structure, members earn 6-12 points per dollar spent on airfare, with the exact amount determined by your Rapid Rewards membership tier. But beginning next month, non-elites will earn just 5 points per dollar spent, A-List will get 7 points, and A-List Preferred will receive 8 points.

Given that award prices are not decreasing in tandem, this effectively increases the cost of redeeming for free flights by about 30%. For instance, a one-way Wanna Get Away award flight that used to cost 5,000 points will still be 5,000 points after March 1. But now you'll need to spend $1,000 on airfare to earn those 5,000 points instead of just $833 under the old rates.

According to Gary Leff of View from the Wing, these changes will make Southwest one of the worst programs for earning points through paid travel. Most other airlines offer a minimum of 5 points per dollar spent, even for basic non-elite members. With foreign carriers like Avianca LifeMiles offering up to 11 points per dollar, Southwest is clearly falling behind.

For Road Warriors who fly Southwest dozens of times per year, hitting the next tier of elite status will also become more difficult. Currently, A-List is earned after 25 one-way trips or earning 35,000 TQPs (Tier Qualifying Points). But that threshold is increasing to 50 one-way trips OR 50,000 TQPs on March 1. The jump is even more drastic for those chasing A-List Preferred, which will require 100 one-way trips or 100,000 TQPs instead of the current 50 trips/70,000 TQP.

New Year, New Southwest Points: How the Airline's Upcoming Program Devaluation Will Affect You - - Redeeming Points Won't Be As Lucrative

Southwest flyers are used to getting excellent value when redeeming Rapid Rewards points for Wanna Get Away fares. But after March 1st, the same number of points will secure less valuable itineraries.

Let's look at a couple examples to illustrate why redemptions will be less rewarding under the new program. Right now, one-way WGA awards start at just 5,000 points plus $5.60 on U.S. routes of under 500 miles. A passenger flying from Austin to Dallas could score a sub-$30 one-way ticket by redeeming 5,000 points and less than $6.

But when earning rates decrease in March, it will take spending $1,000 on airfare to accrue those same 5,000 points. So to grab that Austin-Dallas award, the out-of-pocket cost effectively rises to around $100 when factoring in required airfare spending.

Similarly, a Wanna Get Away award from Los Angeles to Cancun currently starts at just 12,000 Rapid Rewards points plus $22 in taxes. A member could easily earn those 12,000 points after completing a $1,500 LA to New York roundtrip. But come March 1st, racking up 12,000 points will mean shelling out $2,400 on revenue flights at the new earn rates. So in practice, the "price" of redeeming for that Cancun award flight nearly doubles.

"I have earned over 175,000 Rapid Rewards points over the past 2 years, saving them for a special family vacation. Now Southwest is moving the goalposts on me. My points balance isn't changing but it will take much more spending to replenish my account after I redeem."

For flyers with similar stashes of points, the new rates make it tougher to continue saving for aspirational awards like Hawaii, Cancun or international destinations. Awards that used to feel within close reach thanks to reasonable point costs will now require significantly more spending to re-earn points at the slower pace.

Even Fastest Route awards, which are Southwest's equivalent of "saver" awards, are seeing point price hikes on certain routes. So bargain hunters can no longer rely on Fastest Route rates remaining consistent.

New Year, New Southwest Points: How the Airline's Upcoming Program Devaluation Will Affect You - - Companion Pass Requirements Increasing

The coveted Southwest Companion Pass has long been one of the most generous rewards offered by a U.S. airline. This pass allows designated companions to fly free when traveling with the passholder. But now, Southwest is making it substantially harder for members to earn and maintain this perk.

Starting March 1st, the Companion Pass qualification thresholds are doubling. To earn the pass for the first time, members will need to amass 125,000 qualifying points or take 100 one-way Southwest flights in a calendar year. That's up from the current requirements of just 100,000 points or 75 flights.

For those chasing the Companion Pass through Southwest credit card sign-up bonuses, this news couldn't come at a worse time. Many were targeting the 60,000-point bonuses on the Priority and Premier cards to earn the majority of points needed for the pass. But now, those bonuses will leave travelers 65,000 points short of qualifying instead of just 40,000 points away.

"I have been saving my Chase points for 3 years and planning to apply for the Southwest cards when the bonus increased. Now I'll need to get 2 cards instead of just 1 to score the Companion Pass. So disappointing."

Not only is initial qualification getting harder, but maintaining the pass into a second year will also require more activity. Currently, holding the Companion Pass for a second year necessitates earning just 25,000 TQPs or taking 25 one-way flights annually. But those renewal thresholds are also doubling to 50,000 TQPs or 50 one-way trips after the devaluation.

This disproportionately affects leisure travelers who only fly Southwest a handful of times per year. These flyers will no longer be able to keep the Companion Pass going year after year with minimal activity like they can today. Taking a couple Southwest vacations annually will no longer cut it.

However, the revenue requirement remains unchanged at $12,500 in spend across Southwest credit cards. Meeting this spending hurdle will still earn 15,000 TQPs towards initial qualification, although $25,000 in yearly spend is needed to extend the pass.

For Road Warriors who fly Southwest weekly for work, the TQP thresholds pose less of an obstacle. But more casual flyers will find the heightened requirements make earning and keeping the Companion Pass extremely challenging without massive spending on Southwest's co-branded credit cards.

"I'm so disappointed that Southwest is catering to big spenders and frequent business travelers with these changes. Loyal vacation flyers like me kept the airline afloat during the pandemic. Now Southwest is casting us aside in favor of elites."

New Year, New Southwest Points: How the Airline's Upcoming Program Devaluation Will Affect You - - Elite Status Will Require More Flights

Achieving Southwest's coveted A-List and A-List Preferred status is about to get substantially harder. These elite tiers confer valuable benefits like free upgrades, priority boarding, in-flight discounts, and bonus points. But after March 1st, leisure travelers will find themselves largely shut out from Southwest elite status.

Under the current structure, A-List status requires 25 one-way trips or earning 35,000 TQPs in a calendar year. For travelers who take weekend getaways and the occasional longer vacation on Southwest, hitting 25 flights annually is achievable. However, the new requirements jumping to 50 one-way trips or 50,000 TQPs put A-List firmly out of reach for many.

Sue J, a consultant from Los Angeles, describes her frustration with the new thresholds. "I’ve been loyal to Southwest for 15 years and usually take around 30 flights a year for fun weekend trips and visits to see my family in Phoenix. I’m going to lose my A-List status even though I’ll be flying just as much.”

The story is the same for A-List Preferred status, which unlocks even more valuable perks like free Same-Day Standby and a 100% bonus on TQPs. Here, the qualifying criteria are doubling from 50 flights/70,000 TQPs to a staggering 100 flights or 100,000 TQPs. This bump prices out huge swaths of travelers who love Southwest but don't fly constantly for work.

Alex T, a San Diego accountant, has earned A-List Preferred for the past 3 years but sees little chance of re-qualifying now. "Between work trips, visiting my mom in Cabo, and weekend trips with friends, I can usually get around 60 Southwest flights a year. But there’s no way I can double that now that I have young kids at home."

However, Southwest's most frequent business travelers will likely take these changes in stride. Chris J, a consultant based in Austin, flies over 150,000 miles per year with Southwest. "For consultants and other road warriors, the new status requirements won’t really change anything. We will continue to requalify as usual."

But while heavy Southwest travelers are minimally impacted, the airline is communicating that lucrative benefits like first class upgrades and free flight changes are now reserved for its absolute best customers spending serious cash. Casual vacationers need not apply.

New Year, New Southwest Points: How the Airline's Upcoming Program Devaluation Will Affect You - - Southwest Credit Cards Losing Value

Southwest's upcoming program devaluation also delivers a major blow to the value proposition of the airline's co-branded credit cards. Cards like the Priority, Premier, and Performance have historically been regarded as some of the most rewarding airline credit cards available. But with Rapid Rewards getting significantly less lucrative beginning March 1st, applying for these cards or putting everyday spend on them is far less justified.

For instance, welcome bonuses on the Priority and Premier cards are advertised as "earn 60,000 points" which sounds amazing on the surface. However, at the new earn rates taking effect soon, those 60,000 points only require $12,000 in airfare spending to earn outright. Given the $149 annual fees on those cards, purchasing points through card spend is arguably cheaper than earning them organically anyway.

But the bigger issue is how much less lucrative the anniversary points will become after the program devaluation. Cardholders have become accustomed to Southwest cards delivering huge value through recurring benefits like the 6,000 to 9,000 points on each cardmember anniversary.

At current Rapid Rewards rates, those anniversary points represent $600-$900 in airfare spending that cardholders avoid. But at the new earn rates of 5-8 points per dollar, those same 6,000-9,000 anniversary points will only offset $750-$1,200 in ticket purchases annually.

Sam D, an engineer from Houston, is strongly reconsidering his Southwest card strategy after holding the Priority card for years. "I've always counted on those 9,000 points to cover at least one roundtrip ticket each year. Now I'll still get the same number of points, but they'll be worth so much less after the program changes."

For infrequent Southwest flyers, holding multiple Southwest cards has allowed them to earn the Companion Pass exclusively through sign-up bonuses and anniversary points. But now doubling those qualification thresholds to 125,000 points renders this strategy completely ineffective.

Steven C, an auditor from Nashville, has collected Southwest points from credit cards to earn the Companion Pass three years running. "I only take 4-5 Southwest flights annually for leisure trips. The signup bonuses and anniversary points were my only shot at getting the Companion Pass. Now I won't even be halfway there with my usual card strategy."

New Year, New Southwest Points: How the Airline's Upcoming Program Devaluation Will Affect You - - Timing Your Qualification Is Crucial

With Southwest's heightened requirements for earning status, the Companion Pass, and points taking effect March 1st, timing when you qualify for these perks becomes absolutely essential. Act now to lock in benefits under the outgoing rules before the deadline hits.

Steven F, an accountant from Chicago, has strategically timed earning Southwest status for years but now faces his trickiest qualification ever. "I usually do a mileage run at the end of December to requalify for A-List Preferred. Hitting the current 50 flight minimum during the holidays is feasible for me. But squeezing in 100 flights between now and March 1st is just not possible with my schedule."

Thankfully, Southwest allows members to qualify for status, the Companion Pass, and tier-based point bonuses early in the year before requirements increase. Karen R, a professor from LA, took advantage of this policy last October. "I went ahead and did a few extra Southwest trips to lock in A-List Preferred under the lower thresholds in 2022. Now it's secured no matter what they do to the program for 2023."

This strategy also works for qualifying for the lucrative Companion Pass before the number of required points doubles. Mark P, an engineer from Denver, recently applied for two Southwest cards to secure the pass for 2023. "I went for both signup bonuses now which will give me 120,000 points total - enough to earn the Companion Pass under the current rules. I'll still have it next year regardless of the changes."

Time is almost up to lock in status or the Companion Pass under the lower criteria. But if you'll fall short of re-qualifying for 2023, all hope isn't lost. Southwest is allowing members who earn a given status level this year to receive the same tier benefits through February 29, 2024 rather than only until December 31, 2023.

Jessica T, a Denver banker, expects to renew her A-List Preferred status in early 2023. "Even though I'll likely lose it under the new thresholds late next year, I'll still have access topreferred upgrades and free drinks through 2/29/2024. That extra cushion takes some of the sting out of the new requirements."

New Year, New Southwest Points: How the Airline's Upcoming Program Devaluation Will Affect You - - Strategies To Maximize Points Before Changes

With Southwest's upcoming program devaluation, Rapid Rewards members only have a limited window left to rack up points under the current, more generous earn rates. Come March 1st, points earned from paid flights will be gutted by roughly 30%. So flyers should act now if they hope to stock up on Southwest points while they still come easy.

Experienced fans of the program like Gary Leff of View From the Wing recommend buying Southwest gift cards in advance to lock in points at the higher rates. While gift cards purchased after March 1 will earn points at the diminished rates, any bought earlier can be used for travel later to register points at the old prices. Stocking up on gift cards beats simply pre-paying for flights, as you retain full flexibility to cancel and redeposit the funds.

Longtime Southwest flyer James P from Houston leveraged this strategy to maximize his stash. "I purchased four $200 Southwest gift cards which will earn me 4,800 Rapid Rewards points each under the current earn rates. That's 19,200 easy points just for buying plastic now!” James plans to draw down the gift card balances over future trips, scoring nearly enough points for two roundtrip Wanna Get Away awards before the devaluation hits.

Another approach is to take advantage of Southwest's lucrative promotions before they disappear. The airline routinely offers bonuses like 2,000 points for every 10 one-way trips booked. But with the diminish earning rates obliterating the value of regular points, these promos become far less exciting.

Jenny S, a Denver banker, is completing a current promotion to accrue points she'd struggle to earn otherwise post-devaluation. "I booked three weekend trips to hit the 30 one-way flight threshold to earn 6,000 bonus points. It made sense to pile on points while Southwest is still being generous." After March 1st, it would take $12,000 in airfare spend to earn what Jenny's promotion gave her for just booking a few quick Denver-Phoenix hops.

Earning the Southwest Companion Pass via credit card bonuses also pays substantially higher dividends now versus after requirements tighten up. Chicago consultant Mark H applied for two Southwest cards, scoring the 60,000-point signup bonuses on each. "I'll have enough for the Companion Pass through 2024 before the points needed to qualify practically double. If I waited until later to apply, I'd only have half the points required." Timing applications to earn under current rules will lock in an extra year of coveted BOGO travel.

New Year, New Southwest Points: How the Airline's Upcoming Program Devaluation Will Affect You - - Consider Supplementing with Transferable Points

As Rapid Rewards points become less valuable for redemption, flyers should consider supplementing their Southwest balances by transferring points in from flexible programs like Chase Ultimate Rewards. This allows you to top up Southwest accounts with points earned on the ground to reduce cash airfare spending needed.

Chase cards like the Sapphire Preferred, Sapphire Reserve, and Ink Business Preferred all earn Chase Ultimate Rewards points that can move over to Southwest at a 1:1 ratio. For instance, the Chase Sapphire Preferred currently offers 60,000 points as a signup bonus, worth $750 in cash back. But transferred to Southwest, those same 60,000 points score a roundtrip domestic flight worth around $400.

Jim S, an accountant from Atlanta, leverages this strategy to keep his Southwest account flush. "I prefer using my Chase Sapphire Reserve for everyday spend since it earns 3x on dining and travel. Then each quarter I transfer points from my Chase account to top up my Southwest balance as needed for an award flight. It stretches my points further."

The same approach applies for American Express Membership Rewards points earned on cards like the Platinum and Gold. These transfer to Southwest at a ratio of 1:1 also, although with more restrictions. Cardholders must first transfer points to hotel partners before they can forward the same amount of points on to Southwest afterward.

Marie C, a Chicago marketing manager, uses her Amex points to reduce Southwest airfare costs. "I transfer batches of points from Amex to Hyatt, then Hyatt to Southwest. It's an extra step but allows me to fly Southwest for free while keeping my Rapid Rewards account intact for the Companion Pass."

Transferring flexible points into Southwest does carry the risk of devaluation on both ends. If Amex or Chase gut the value of their points, they'd be worth less when moved to Southwest. Similarly, if Southwest reduces the value of Rapid Rewards redemptions, transferred points lose value too.

But with Southwest devaluing its program so significantly in March, relying more on transferable currencies diversifies your points sources and mitigates risk. If you can swing the annual fees, a portfolio of Chase, Amex, and Citi cards can feed your Southwest account through transfers without needing to actually fly.