Southwest Airlines is running a promotion from now through the end of May. It gives a 25% bonus on all points purchased (for one’s self or gifted) or transferred. It is available for all members and the transaction.
So, is it a good deal? I have written before about good purchase/transfer promos from other airlines and some of them have been very good deals, but only for some people depending on the type of redemptions they have in mind. But with an airline like Southwest which has a revenue based redemption program, it becomes more cut-and-dried. With Southwest Airlines current award redemption value of 70 points per dollar, the redemption cash value comes out to right around 1.5 cents per point. I say “around” because it can vary slightly depending on the ticket and the taxes involved. Because you only pay a segment tax when booking a Southwest award ticket, the other taxes are taken care of by the points.
It normally costs 2.75 cents per point to purchase or gift Southwest points. With this promotion, that works out to a cost of just a bit over 2 cents per point. While that is a bit of a nice savings, you are still paying more for the points for an award than the actual ticket would cost. The only way that this makes sense is if you are within a couple thousand points of a planned redemption and you are unable to transfer points from someone else. These purchased/gifted points do not count towards the Companion Pass qualification, so do not purchase points thinking you will get those extra qualifying points. So, except for some very singular cases, it would not be a good idea to purchase points, even with this 25% savings
The part that becomes a little murkier is when it comes to the transfer option. It normally costs 1 cent per point to transfer points from one account to another. With this promo, that cost is lowered to .75 cents per point. Transferring points will get you a savings of 1/2 price over the cost of purchasing the ticket, but you are not generating any new points. This is not like the US Airways share promos where you get a bonus on top of what you transfer. With this promo, you are simply moving the points from one account to another at a 1:1 ratio. In most situations, you are better off just booking the ticket out of the original account.
But here are two ways that it could be a very good deal to transfer the points. The first one is if you want to transfer the points into an account that has the Companion Pass. By transferring those points into that account, it allows the account holder to book a ticket and then add a companion on to the ticket for free. In this scenario, it could be helpful to transfer points.
Another way that it could be a very good idea is for all of you who signed up for the Southwest promo back in February. That promo gave new Southwest Rapid Reward accounts 2,000 points for joining (instantly) and another 500 points within a couple of months for receiving Southwest e-mails. I had signed up each of my children through this promo and they each received 2,000 points. By themselves, 2,000 points is really not going to get you anything – not even a one-way ticket. As children, they are unable to get a credit card for their account to increase their points and we do not fly Southwest enough for them to earn more. So, the only way for them to get additional Southwest points to have enough for a flight was to have me transfer some of my Ultimate Reward points to their account. I really did not want to do that as I generally save my UR points for United and Hyatt. Instead, with a promo like this, you can transfer the 2,000 points from those new accounts into your own account (or someone else’s) for a total cost of $15. In this situation, this promo is a really good deal and probably the best way to ever get those points out of that account.
So, do you think you will take advantage of this promo? Are there any scenarios for good uses of this that I had missed?