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The first thing to remember about valuing points is that there are very few times when valuations are absolute. The value of points for any given reward program usually depends on how, when, and where the individual will be redeeming those points. So I’m going to explain how I value Southwest Rapid Rewards and how much value they bring to me with the Southwest Companion Pass.
The starting point
I first figure out my future redemptions. I start with those flights that I’m certain to redeem and then factor in others that I’m planning on redeeming sometime in the near future. I think figuring out the redemption for 3-4 potential flights should be sufficient, but you could always play around with more numbers.
It’s important to remember to be realistic when doing this.
You might be tempted to “plan” for those super cheap flights that depart very early in the morning or arrive very late at night but when push comes to shove are you really going to book those? Or how about layovers, are you willing to deal with those? The other thing to think about is your availability, can you really take off on all those four day weekends or book those mid-week flights?
Personally, I have three things going for me that have made it easier for me to realistically plan on booking flights that have less desirable departures, arrivals, and lay-overs. These might be helpful things for you to consider when planning future flights.
1) Willingness to fly early or late
I don’t have problems with flying late or early, mostly because I live about 15-20 minutes from the airport so departing early or arriving a little later in the evening isn’t much of a problem. Obviously, relocating your home isn’t an option for most, but just consider how truly open you are to arriving at the airport at 4:45am or touching down at 9:55pm on a Sunday. Just because those fares are the cheapest doesn’t mean you’ll actually go for them when it comes time to book.
2) Lounge access
I have lounge access through the American Express Platinum Card and Ritz-Carlton Rewards Card so lay overs don’t bother me much and I kind of look forward to experiencing new lounges when possible. I’ve since found that being open to lay-overs now makes travel planning much less of a headache — don’t underestimate the convenience of a nice airport lounge!
3) Flexible work schedule
Third, and most importantly, I have the luxury of having a pretty flexible work schedule so I can take off just about whenever I want so it does make things easier.
Now, I still have to remember to be realistic about taking mid-week flights and not eating up too much time on lay overs, but being realistic about these have helped me make accurate estimations on what future flights I’ll actually take on future trips.
Finding the average points redemption from Houston
Below are four trips that I’m likely to take within the next 12 months on Southwest and their corresponding rates. You can see their actual cash price, their Rapid Rewards price, and then what the redemption rates comes out to.
HOU to OAK (Oakland)
- $404 round trip
- 24,468 Rapid Rewards + $11.20 in fees
$404 – $11.20 = $392.80
$392.80 / 24,468 = 1.6 cents per point.
HOU to MBJ (Jamaica)
- $404.76 roundtrip
- 17,500 Rapid Rewards + $114.66 in fees
$404.76 – $114.66 = $290.10
$290.10 / 17,500 = 1.6 cents per point.
HOU to MDW (Chicago)
- $332.95 roundtrip
- 21,584 Rapid Rewards + $11.20 in fees
$332.95 – $11.20 = $321.75
$321.75 / 21,584 = 1.4 cents per point
HOU to CUN (Cancun)
- $459.70 roundtrip
- 24,998 Rapid Rewards +$74.10 in fees
$459.70 – $74.10 = $385.60
$385.60 / 24,998 = 1.5 cents per point
So the redemption rates for the four trips are as follows:
That brings the overall redemption rate average to 1.525 cents per point. This is pretty standard for Southwest but keep in mind that your average redemption rate for Southwest flights could be a little higher or lower.
How much is the Southwest Companion Pass worth?
In obtaining the Southwest companion pass I have accumulated a little over 110,000 Southwest Rapid Rewards. That means I can value the pass at $1,677.5 since 110,000 X .01525 = $1,677.5.
However, since Brad and I fly together on every flight we ever redeem that value is instantly doubled since he flies for free. So that’s $3,355 worth of value at 3 cents per point.
And just to play it conservatively, I’ll deduct the two annual fees I have to pay of $99, so the grand total of value of the Southwest Companion Pass for me is $3,157 as a value of 3 cents per point for Rapid Rewards.
Getting that dollar amount of travel for free is great but with Southwest it’s more about the quantity of experiences. Being able to travel to Cancun, Jamaica, Chicago, the San Francisco Bay Area, and still another destination yet to be determined is amazing and I’d take those multitude of experiences over one first class redemption worth $3,000 in travel almost any day.
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Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. His content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.