The Surprising “Value” of a Southwest Point

In my post earlier in the week, I said something not entirely true.  I said that with the 50,000 bonus point Southwest credit card sign up bonus those points are worth about $844 points.

Since Southwest Rapid Rewards are a fixed value, you’d think the case would be open and closed in terms of how much a Southwest point is worth.

While my observation isn’t earth shattering, it’s important to note that Southwest points are probably worth more than you think.

The Southwest Math Factor

Currently, it takes 60 Southwest points per dollar of the cost of a ticket.  As of March 31st, 2014, it will take 70 Southwest points per dollar of the cost of a ticket.

Said another way, a Southwest point is worth 1.69 cents now and 1.44 cents after March 31st, 2014.

As a quick example, I pulled up some flights from Denver to Los Angeles.

The 6:10 a.m. – 11:55 a.m. flight Wanna Get Away fare is $157.  However, when you multiply 157 * 60, the fare should cost 9,420.  In fact, the fare costs 8,100 +$5.  Let’s say you included the points value of the $5; then the total should be 8,400 points –  still a far cry from 9,420.

Example #2

Flying from Seattle to Los Angeles, the 6:00 a.m. flight is $90 and the 6:05 flight (with no plane change) is $83.  However, when you switch over to points mode, both flights cost 4,080.  For the $90 flight you’re getting 2.2 cents value out of each point.

Moral of the story: Because of tax considerations, plane changes, and how Southwest prices their tickets, it is possible to get more than 1.69 cents value out of each point.

The Southwest Baggage Factor

Over the Christmas holidays, we flew Southwest to visit my parents.  Because we’re a family of five, we checked five bags. Three bags had a weeks worth of clothes, one bag had gifts, and the last bag had all our winter gear.  On the trip back, we had five bags again as our bag of gifts were replenished with gifts to bring home.

All in all, we would have paid $250 for baggage if we were flying any other airline.

If the average round trip costs $250, then a person would pay (for illustration purposes) 15,000 Southwest points.  But each point also saves $50 as compared to any other airline (assuming you check one bag each way).  With this new math expanded to include baggage, you’ll get 2 cents per point value out of each point even if you’re only getting 1.69 cents savings out of each point.

The Southwest Flexibility Factor

I don’t often pay money to cancel award tickets on other airlines (because I usually wait for a schedule change and do it for free), but this week I did pay $150 to cancel an American Airlines Aadvantage flight.

Southwest allows free flight cancellations.

This adds a value that’s hard to measure.  I’ve probably cancelled a half dozen Southwest flights in the last year.  It’s nice being able to book a cheap flight if you think you might take it and cancel it, without cost, when you know you won’t take the flight.

As an example, this Christmas we weren’t sure if we’d be able to leave on the 24th or need to wait until the 25th.  The weather was one of several factors affecting our decision.  Southwest made it easy since we just booked both flights and cancelled the flight on the 25th once we got on the flight on the 24th.

In your calculating the value of your Southwest points, you ought to give some extra value to them because of their flexibility.

Leave a Reply

Your email address will not be published. Required fields are marked *