Southwest Changes Course With New Rewards Program

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(It's worth noting that such convoluted calculations are a necessary byproduct of the new program's complexity. While the program is highly transparent in theory, it sometimes requires a calculator to bring that transparency to light.)

New Winners, Old Losers

While there's a common-sense element of fairness to the new scheme -- loyalty is better measured by dollars spent than by flights or miles flown -- the effect of the over-weighting for pricier tickets is a less valuable program for flyers accustomed to earning a free flight after eight cheap short-hop flights and redeeming for a pricey long-haul flight.

And it is just such flyers who unleashed their vitriol following the announcement of the new program's details.

Of the dozens of e-mails and blog responses I received in response to my initial review of Rapid Rewards 2.0, the following is typical of the naysayers' sentiments:

As a 20 year loyal customer of Southwest, I cancelled my two Rapid Rewards credit cards and began booking Alaska Airlines instead after hearing about this fiasco. This is a terrible shift for Southwest's flyers, especially if you travel on relatively short flights. Under the current system, you get to fly anywhere in their system one way after eight flights of any length. This new system requires you to fly 10 times for a reward that only corresponds to your average ticket price.

Although a decided minority, there were also some positive comments. Among them:

Finally, an airline that awards frequent flier points based on the dollars you spend versus miles traveled. I never understood why a $200 flight across the country should be deemed by the airline as more deserving of rewards than an $800 flight on a short regional flight. After flying from DC to LA for two and a half years, I can't say I ever complained though!

Southwest's New Flight Plan

Revenue-based programs aren't new. Virgin America's Elevate program was designed along the same model, as was the second generation of JetBlue's True program. But neither developed the concept as exhaustively as Southwest has. And neither airline has the customer base, and thus the potential to influence the industry overall, that Southwest enjoys.

But Southwest is less concerned with the response of the industry than it is with the net effect on its customers, as measured in dollars on its bottom line. Will the new Rapid Rewards program spur sales of more and pricier tickets to business travelers? Will the legions of vacationers who have made Southwest one of the most consistently profitable U.S. airlines defect?

Just as there will be winners and losers under the new rewards scheme, there will customers gained and customers lost. The former will have to far outnumber the latter if the new strategy is to generate the "additional several hundred million dollars" annually Southwest has publicly targeted.

The results won't be in for at least six months after the new program's launch. Until then, Southwest can only sit back and cross its corporate fingers. After spending three years and close to $100 million on the Rapid Rewards redesign, there's no turning back from what could be a bumpy ride.

Tim Winship is Editor at Large for SmarterTravel, as well as the editor and publisher of FrequentFlier.com, and a frequently quoted expert on frequent flyer programs. This article originally appeared on SmarterTravel.

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