Southwest’s groundbreaking feature will allow you to convert vouchers into Rapid Rewards points
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
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.
Stay up-to-date on the outbreak by visiting our hub page for coronavirus coverage and signing up for our daily newsletter.
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.
Featured photo courtesy of Denver International Airport.
Sign-up Successful!
Welcome to The Points Guy!
WELCOME OFFER: 80,000 Points
TPG'S BONUS VALUATION*: $1,650
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
- Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
- With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.
Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.