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Southwest unveils new spending-based frequent flyer program

Southwest Airlines officials said last year they were working on a complete overhaul of the carrier’s Rapid Rewards frequent flyer program, and now they have announced the new plan will begin on March 1. The old system, which based earning and award travel on the number of flight segments, will be replaced with a new model in which members accumulate points based on the amount of money spent, and point redemption varies by the dollar cost of the award. Southwest said that members’ existing program credits and status levels will be retained and automatically switched over to the new program; Rapid Rewards account numbers will also remain unchanged, so there is nothing members have to do to make the transition.

Highlights of the new Rapid Rewards: Every unbooked seat will be available for award travel, with no blackout dates or capacity controls; points will never expire as long as the member’s account shows some earning activity at least once every two years; and members who use the Rapid Rewards credit card can redeem points not only for Southwest flights but also for international flights, hotel stays, rental cars, cruises and gift cards at 45 major retailers. The new program also lets members purchase additional points in blocks of 1,000. For business travelers, the new Rapid Rewards retains the existing A-List elite level and also adds a new A-List Preferred status. “The new frequent flyer program has the potential to contribute hundreds of millions in incremental revenue annually for Southwest, net of any associated program costs, to be fully realized over the next several years,” the company said in announcing the plan. The company has set up a special website explaining the basics at www.newrapidrewards.com.

In the new earning structure, Rapid Rewards members will earn more points for the least restricted (and more expensive) fare levels. The airline’s Wanna Get Away base fares earn six points per dollar spent, while Anytime fares collect 10 points per fare dollar and Business Select fares bring in 12 points per dollar. A-List program members will get a 25 percent point earning bonus on their spending, and A-List Preferreds will merit a 100 percent earning bonus. Besides earning points for spending on Southwest, members will also earn points for dollars spent at program partners including hotels, restaurants, retailers and the like. For redemptions, Wanna Get Away fares cost 60 points per dollar of fare, while Anytime fares cost 100 points per dollar and Business Select award ticket prices are 120 points per dollar of fare. For transition purposes, one flight credit in the old Rapid Rewards system converts to 1,200 points in the new one. With the new redemption system, “you can get the most out of your points by planning ahead so you can redeem them for the lowest fare possible. When you can plan ahead, you spend fewer points, and when a flight goes on sale, the number of points needed to redeem for that flight goes on sale, too,” said Ryan Green, Southwest’s senior director of customer loyalty and partnerships, in a blog post explaining the program (http://www.blogsouthwest.com/blog/introducing-all-new-rapid-rewards-blog-post).

Exact comparisons between the benefits and costs of the old Rapid Rewards program vs. the new one are not simple, but already some members are claiming that the average award trip will require more travel on Southwest than the old system demanded. The popular web site Flyertalk has created an analysis and discussion area about the new Rapid Rewards, which is sure to generate lots of activity. You’ll find it at: http://www.flyertalk.com/forum/southwest-rapid-rewards/1168741-rapid-rewards-2-0-begins-march-1-2011-a.html.

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