Southwest's groundbreaking feature will allow you to convert vouchers into Rapid Rewards points
Southwest is joining the bandwagon of major airlines extending elite status due to the coronavirus pandemic. Over the course of the past two weeks, we've seen Alaska, American, Delta and United all extend status, so it was a matter of time before we heard from America's largest domestic air carrier.
And it's got great news for those with A-List status or a Companion Pass. But buried in the press release is a potentially exciting feature that we've never seen before — the ability to convert travel funds into Rapid Rewards points.
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Southwest is the only major airline that doesn't have any change or cancellation fees, so it didn't need to issue any change fee waivers like the rest of the industry. Instead, anytime you voluntarily cancel a Southwest Wanna Get Away fare (the cheapest), the value of your ticket will be kept in a travel fund that typically expires one year from the date the ticket was issued.
Related: Southwest extends Companion Pass, elite status benefits into 2021
As part of today's announcement, funds that are set to expire or funds that are created between March 1, 2020 and Sep. 7, 2020, will have an expiration date of Sep. 7, 2022. That's great for those who need some more flexibility and are uncertain of what the future holds.
But aside from the expiration policy, there's long been another annoyance about travel funds: they can only be used by the originally-ticketed traveler. That means that even if you purchased a ticket for a friend or family member, they'll get to use the value of the ticket for future travel.
In order to mollify those concerns, Southwest's newest option will allow customers to convert select travel funds into Rapid Rewards points. On the surface, that's great news for customers, since points never expire, never have change or cancellation fees and you can redeem them for anyone you choose.
Related: Complete guide to coronavirus and airline elite status
But there are some things that remain to be seen to determine whether this will actually be a good deal. For one, this option will only be available to those passengers who have travel funds that are set to expire or funds that are created between March 1, 2020 and Sep. 7, 2020. It's unclear whether the applicable period will be extended further. If the shelter-in-place and stay-at-home orders continue to get extended across the country, I'd bet that it will.
But the real kicker will come down to the conversion ratio. According to the press release, it'll be the "same rate you would be able to purchase a ticket with points today." Well, here's the thing: Southwest points are a variable currency, with different values depending on the type of fare you purchase and other factors. Our TPG valuation is at 1.5 cents per point, and the value you get varies slightly based on whether you redeem for Business Select, Anytime or Wanna Get Away fares. Once we know more about the conversion ratio, we'll update this post with our analysis.
Additionally, it'll be interesting to see if Southwest takes into account the fact that you don't earn Rapid Rewards points on award tickets, but you do with tickets booked with travel funds. Furthermore, you don't earn tier-qualifying points (TQPs) or Companion Pass qualifying points (CPQPs) for award travel.
Related: All about the Southwest Companion Pass
As such, it remains to be seen if the these Rapid Rewards will count as TQPs or CPQPs when processing the conversion. I'd bet not, but we've reached out to Southwest to clarify.
Ever since I've taken over the change/cancellation beat for TPG, I've received countless reader emails and Instagram messages with stories about airlines trying to convince passengers to take vouchers with bonuses instead of refunds. Normally, I'd say that it makes sense to collect a refund, unless you're certain you're going to travel again with the airline.
Southwest's new conversion offer has the possibility to tip the scale in favor of collecting points instead of a refund. It'll come down to the ratio that's applied, but hopefully it'll be generous.
And for all the other airlines trying to convince passengers to accept vouchers instead of refunds, it may be time to borrow from Southwest's playbook and allow customers to convert credits to points.
TPG featured card
at Bilt's secure site
Terms & restrictions apply. See rates & fees.
| 1X | Choose to earn up to 1X points on rent and mortgage payments with no transaction fee |
| 2X | Earn 2X points + the option to earn 4% back in Bilt Cash on everyday purchases |
Pros
- Choice to earn up to 1 Bilt Point per dollar spent on rent and mortgage payments
- Elevated everyday earnings with both Bilt Points and the option to earn Bilt Cash
- $400 Bilt Travel Portal hotel credit per year (up to $200 biannually)
- $200 Bilt Cash annually
- Priority Pass membership
- No foreign transaction fees
Cons
- Moderate annual fee
- Designed primarily for members seeking a premium, all-in-one card
- Earn points on housing with no transaction fee
- Choose to earn 4% back in Bilt Cash on everyday spend. Use Bilt Cash to unlock point earnings on rent and mortgage payments with no transaction fee, up to 1X.
- 2X points on everyday spend
- $400 Bilt Travel Hotel credit. Applied twice a year, as $200 statement credits, for qualifying Bilt Travel Portal hotel bookings.
- $200 Bilt Cash (awarded annually). At the end of each calendar year, any Bilt Cash balance over $100 will expire.
- Welcome bonus (subject to approval): 50,000 Bilt Points + Gold Status after spending $4,000 on everyday purchases in the first 90 days + $300 of Bilt Cash.
- Priority Pass ($469/year value). See Guide to Benefits.
- Bilt Point redemptions include airlines, hotels, future rent and mortgage payments, Lyft rides, statement credits, student loan balances, a down payment on a home, and more.