Southwest Variable Award Pricing is Live: Values Range from 1.1 – 1.7 Cents Each

Southwest Airlines has been shaking up its business model and rewards program over the last couple of weeks, making some changes that were previously considered radical. As part of these inauspicious updates, the airline announced it would be introducing "variable" award pricing, which means that redemption rates will change based on demand for a specific flight.

This new approach is a significant departure from Southwest's previous dynamic pricing model, where points fluctuated in concert with cash prices but their value remained relatively static. With variable pricing, the actual value of your Rapid Rewards points will now depend on how much demand exists for a particular flight. In other words, flights with low demand will have lower redemption rates, while those with peak demand may cost more.

As part of this change, Southwest has made variable award pricing live, and initial reports suggest that prices are ranging from 1.1 to 1.7 cents per point in value. To put this into perspective, let's take a look at some examples:

Award Pricing: LA to Honolulu on May 15th

All three connecting flights between Los Angeles and Honolulu are pricing out at around 1.1-1.15 cents per point (cpp) value, while the nonstop option is slightly better at ~1.2 cpp. This represents a significant decline from the usual ~1.4 cents per point for Rapid Rewards points.

Award Pricing: Oakland to Phoenix on September 24th

For this route combination, we can see that some options offer exceptional value for Rapid Rewards points at just over 1.65 cpp each, while others are much worse off at around 1.1 cpp each. The high end of redemption prices now falls between 1.6-1.7 cpp, which is a stark contrast to the usual ~1.4 range.

After analyzing multiple route combinations over five different dates, it appears that there's a clear trend emerging. Low-demand flights are offering around 1.1 cpp in value, while high-demand flights are falling between 1.6-1.7 cpp. However, with so many examples pricing in the 1.1-1.2 range, it's difficult to say definitively how this affects the overall "value" of Rapid Rewards points.

One possible scenario is that if 1/3 of redemptions are ~1.1 cpp, 1/3 are ~1.4, and 1/3 are ~1.7, it may average out to more or less of a wash. However, the initial impression suggests that many more flights are pricing in the 1.1-1.2 range than at the higher end, which could represent an overall decline in the power of Rapid Rewards when used for award bookings.

How you feel about this change will largely depend on your relationship with Southwest points. If they're your primary currency for flights, this represents a decided devaluation. On the other hand, if you utilize multiple airline currencies, this could provide an opportunity to get better value for Rapid Rewards points than usual, allowing you to pick and choose when using them for maximum effect.

This change may be a hard pill to swallow for those who have been most loyal to Southwest and rely heavily on their points. However, for those willing to adapt and diversify their rewards program, this could present a chance to optimize their value and make the most of their points.