A few weeks ago when I wrote about high annual fee premium credit cards (see “The First Step To Recovery Is Admitting You Pay High Annual Fees“), I talked a little bit about Jimmy, a good buddy of mine. Jimmy (whose name has not been changed to protect his anonymity because his name is already Jimmy and what could I possibly change it to that would make him more anonymous?) is not a miles junkie but he really wants to learn, and he’s an awfully nice guy. So when he asks me questions about loyalty programs and credit cards, I’m always happy to help out.
However, earlier this week Jimmy and I got to discussing Southwest. Jimmy doesn’t travel a ton, but when he does, he tends to fly domestically and he likes Southwest. No problem there. But then Jimmy told me his strategy for earning more points with Southwest…
“I buy the Anytime ticket.”
“Uh huh… wait, what do you do?”
“I buy the Anytime ticket instead of the Wanna Get Away fare.”
“The more expensive fare? Why do you do that?”
“So I can get more points.”
Now before everyone gasps in horror, as I mentioned, Jimmy is a newbie and just learning the game. Let me also point out that Jimmy is in fact technically correct. By buying the Anytime fare instead of the Wanna Get Away fare, he is not only earning 10 points per dollar instead of 6 points per dollar, he’s also spending more dollars and therefore earning more points overall.
But we all know that paying money just for miles or points is a fool’s game. The airlines rarely sell miles at a cost that makes sense except for possibly buying just a small amount to “top off” an award you’re about to redeem. The airlines aren’t in this game to hand out miles for less than what they’re worth. That includes Southwest who is more than happy to sell you their points at the exorbitant cost of 2.75 cents per point. Given that you can redeem Southwest points for a maximum value of 1.43 cents per point on the base fare, even I can’t argue against the Conventional Wisdom that says this is an appalling deal.
I started to explain all this to Jimmy, but then I stopped and thought a moment. I don’t really travel much on Southwest and I’ve never bought an Anytime fare. Is it possible that Jimmy knew something that I didn’t? Could there actually be enough value in an Anytime fare that might make buying points via that route more viable? Could the newbie teach the Devil’s Advocate a thing or two, even if he didn’t actually mean to?
Well, let’s find out… is there value in purchasing Anytime fares for the extra points?
Just how much more is an Anytime fare anyway?
There isn’t a specific set dollar difference between Anytime and Wanna Get Away fares — they sometimes have a relationship but also fluctuate depending on route and time of day. So we’re going to have to figure this out by taking a few examples and then assuming our tiny sample size somehow extrapolates to the entire Southwest system. I’m also not going to break out the taxes and fees from the base fare even though we don’t earn points on taxes and fees, because that’s way too much work and I’m lazy. OK, so I admit this isn’t going to be the most scientifically valid investigation, but I think we’ll get the idea. Come on, don’t roll your eyes like that. You know Scott and Eric and Tahsir and Amol do the real heavy lifting around here when it comes to research. I just argue and steal beers.
For our examples, I’ll use three routes: a short haul, medium, and long haul. Also, to make this as favorable as possible to Jimmy, I’ll pick close-in dates where the difference between the Anytime fare and the Wanna Get Away fare is as small as possible.
We’ll start with the short haul route by going from Southwest’s backyard in Dallas to Austin, the capital and heart of Texas. Here’s the fares for this Sunday…
The Anytime fares are only $25 more than the Wanna Get Away fares. That means for $25 more, we’re getting almost 1,000 more points. Still, it means we’re paying 2.5 cents a point, which isn’t much better than what we can just buy them for directly from Southwest.
But wait a minute. For our extra $25, we’re not just getting points. We’re also getting the benefits of an Anytime fare. That means free same day changes and a fully refundable ticket (not just Southwest credit). Those benefits are hard to quantify but they’re definitely worth something. So let’s reverse the math and assume the 1,000 points at 1.43 cents per point are worth roughly $14. Is it worth paying $11 more for a fully refundable ticket? Personally I’m pretty cheap but I’d probably say yes to that deal.
In fact, if we happen to look one more column over at the Business Select fare, there’s value there too. Business Select fares earn 12 points per dollar so for an extra $53 over the Wanna Get Away fare, we’d gain an extra 1,750 points. Again, definitely a bad deal if all we were getting were points, but there’s more to the Business Select fare than just points. If we assume those 1,750 points are worth $24, then we’re only paying an extra $29 for the rest of the Business Select benefits, which are not only a fully refundable ticket with free same day changes, but also priority boarding, priority security lanes, and a free drink. Southwest sells Early Bird Check-In for $12.50 alone and that doesn’t even get you ahead of the Business Select folks. So if those benefits are useful to you, this doesn’t seem like such a horrible deal after all.
What about a medium length route?
Albuquerque to Chicago is 1,100 miles according to the Great Circle Mapper and July 16th was the first date with any Wanna Get Away fares available…
Hmmmm, now this doesn’t look quite as enticing. For the moment let’s assume we aren’t willing to take that 6 am flight (because at least in my household it’s always safe to assume we aren’t willing to take the 6 am flight). That means the Anytime fare costs $114 more than the Wanna Get Away fare. We get approximately 2,800 extra Southwest points from buying the Anytime ticket, which are worth around $39. So the rest of the Anytime benefits cost an extra $75. Not quite as good a deal as $11. I’m not sure I’d take that one unless I really needed the flexibility of a full refund or a same day change.
Note that the Business Select fare is $22 more than the Anytime fare across the board on this route and for that $22 you get an extra 1,300 Southwest points worth roughly $18. So if you think it’s worth the extra money for the Anytime fare in this case, you should probably just go for the Business Select fare instead, pocket the additional points, and get the extra benefits for $4 more.
But it ain’t over until we’ve let the long haul sing…
New York to Phoenix is over 2,000 miles and one of the longest nonstop domestic routes offered by Southwest…
Yuck. It’s basically $212 more for the Anytime fare. Even if we figure the extra 3,700 points are worth roughly $52, this route is going to cost us an additional $160 just to get a refundable ticket and same day changes. That’s essentially the same change/cancel fee as a legacy carrier and therefore something to be avoided. The Business Select fare is $28 more than the Anytime fare and gains us $22 in additional points, so as before you’re probably better off with the Business Select fare over the Anytime fare if you’ve already decided to buy up. But in this case I’d likely avoid both, go with the cheapo option, and just take a Southwest credit if I found the need to later cancel the ticket.
There’s still one major factor though…
Those of you familiar with Southwest already know what I didn’t include in all these calculations — a Southwest Companion Pass. If Jimmy is traveling regularly on Southwest with his wife and they’ve put together enough Southwest points to get a Companion Pass, then they’re able to travel 2 for 1 (aside from some very minimal taxes) on any of the above tickets. That means they’d be getting the benefits of the Anytime fares for two people at the same price. It also means the above points values are doubled because when you redeem your points with a Companion Pass, you’re also getting 2 for 1 tickets.
So going back to our first short haul example, if you have a Companion Pass your 1,000 additional points are worth $28 and you’re only paying an extra $25 to get them, plus you’re getting two fully refundable tickets. That’s a no brainer. The points from the Anytime fare on our medium-haul example are worth $78 which makes the rest of the Anytime benefits cost only $36 total for two tickets. Even the long haul example isn’t quite so terrible, with the extra points being worth $104 and the remaining Anytime benefits costing $108. I’m still not sure I’d spend $108 extra just to get a fully refundable ticket (or even two), but it’s at least a possibility.
The Devil’s Advocate has learned not to discount those Anytime fares so quickly.
In all of these examples, the big catch is that we’re acquiring points at their full redemption values, which means we’re effectively just buying our future fares via points instead of cash, not getting any sort of free flights. If Jimmy is hoping to travel for free using this method, he’s going to be disappointed.
But another way to look at it is that a significant portion of our additional cash outlay on Anytime or Business Select fares can be recovered via future flights, thereby making the rest of the extra benefits nearly free (more so on shorter flights and especially if we’re regularly using a Companion Pass). When you consider the calculation that way, it makes voluntarily paying those higher fares a somewhat more tempting proposition. It won’t be the right choice every time, but it’s worth taking a moment to do the math before instinctively clicking on the lowest fare.
So Jimmy, we’re no longer laughing at you. We’re laughing with you. Well, maybe not with you… how about we’re all laughing together? Does that work? Or is everyone still just laughing at me and my lazy research? OK, fine, leave me to drink my beer in peace.
Devil’s Advocate is a weekly series that deliberately argues a contrarian view on travel and loyalty programs. Sometimes the Devil’s Advocate truly believes in the counterargument. Other times he takes the opposing position just to see if the original argument holds water. But his main objective is to engage in friendly debate with the miles and points community to determine if today’s conventional wisdom is valid. You can suggest future topics by sending an email to dvlsadvcate@gmail.com.
