Southwest Airlines Devalues Points, Travel Credits, Cheap Fares

It wasn’t just the elimination of free checked baggage that was announced today at Southwest Airlines. In the weeks ahead, we will also see points worth less, the return of expiration on travel credits, and the formal introduction of basic economy.

More Devaluations At Southwest Airlines: Points, Travel Credits, Cheap Fares

Let’s look at the other changes Southwest announced today, all of them negative.

Variable Redemption Rates Will Squeeze Value Out Of Rapid Rewards

Per Southwest, “Rapid Rewards, the carrier’s loyalty program, will introduce variable redemption rates across higher-demand and lower-demand flights.”

Think of it this way. Southwest has a revenue-based loyalty program on both the earning and redemption sides. Award ticket pricing is directly tied to the price of a ticket. What Southwest means by this change is that your points may be worth slightly more when you book in advance on low-demand flights (say, 1.6 cents instead of 1.4 cents) but will now be worth less on close-in, high-demand flights (say, 1.2 cents instead of 1.4 cents).

Those are not the exact numbers…I’m just trying to illustrate the way Southwest is hinting how pricing will work. That’s an overall negative because, at least to me, the greatest value of points is in last-minute redemptions.

The companion pass will still keep some using the Southwest Airlines credit card, but for most, a cash-back card will make more sense.

New Basic Economy Fares With More Restricted Flexibility

Per Southwest, it “will introduce a new, Basic fare on our lowest priced tickets purchased on or after May 28, 2025, in advance of offering assigned seating and extra legroom options.”

Here’s a chart Southwest has published with its new “fare products” available along with the fine print:

There appears to be a contradiction here. Southwest says, “Basic fares are nonrefundable and non-changeable except as allowed by our 24 hour cancellation policy. Customers may be eligible for a flight credit if cancelled at least 10 minutes prior to the flight’s original departure time.”

May be eligible? What does that even mean?

On the same chart above, Southwest says that no changes are allowed on basic fares.

My guess is that there will be some penalty assessed… perhaps a percentage of the fare…that will be forfeited if a basic economy ticket is rebooked. I also suspect basic economy fares will earn 1x points per dollar (if anything at all) and will not include assigned seating.

Flight Credits Will Once Again Expire

Flight credits issued for tickets purchased on or after May 28, 2025 will expire one year or earlier from the date of ticketing, depending on the fare type purchased. Specifically, flight credits on basic economy fares will expire six months from date of purchase (subject to potential restrictions I discuss above) while flight credits on all other fares will expire 12 months from date of purchase.

Flights must be cancelled 10 minutes or more before departure or all value is lost.

Since 2022, Southwest has maintained a no-expiration policy on future flight credit.

CONCLUSION

In addition to eliminating its free checked baggage benefit, Southwest Airlines will also introduce basic economy fares, restrict travel credits, and introduce more variability into Rapid Rewards points redemptions.

I see no need to repeat my analysis, other than to say that I do not think these changes will work. Instead, I think they will alienate passengers from Southwest and ultimately hurt the bottom line. While the investment bankers who seem intent on destroying Southwest may deserve our imprecatory prayers, I do not wish ill on the airline…not when it has over 72,000 employees.

This is a fascinating business case to watch: I’ve never seen an established carrier change as quickly as Southwest has.

image: Southwest CEO Bob Jordan