Most know that the majority of the Travel on Point(s) team lives around Washington, D.C. and loves Southwest Airlines. Non-stop flights to almost anywhere, the Companion Pass, a valuable Rewards program, no change fees and 2 bags fly free on all fares. What's not to love, right? Southwest continued that tradition of customer-friendly policies when it announced that certain travel vouchers are extended to September 7, 2022 and later announced that those travel vouchers can be converted to Rapid Rewards points. Today, let's review this process and see if it makes sense for you.
Eligible Travel Vouchers
Southwest Airlines fliers know that you are never penalized by canceling a flight. For cash bookings of Wanna Get Away fares, the full value of your fare is returned to you in the form of a travel voucher. That travel voucher is good for one year from the original date of purchase and is only valid for the original traveler. If you book with points, your points are returned to your account and your taxes are refunded to your credit card. All other fares are always fully refundable to your original form of payment.
Beginning on April 16, 2020, Southwest announced that all travel vouchers created between March 1, 2020 and September 7, 2020 were extended to September 7, 2022. The general travel voucher policy was extended to up to 2.5 years! At the same time, Southwest announced that at some point in the future, those travel vouchers were eligible for conversion to Rapid Rewards points.
As a reminder, eligible travel vouchers are those that are created during that specific time period. Therefore, if you have any travel vouchers that were created before March 1, 2020 (and had an expiration date other than September 7, 2022) or have any airline incidental credits remaining, you should create travel vouchers by September 6, 2020 to ensure they are eligible. If you're unsure how to create new travel vouchers, come join us in our Facebook group for assistance.
Converting Eligible Travel Vouchers to Rapid Rewards
On August 10, 2020, Southwest announced the details for the conversion process for eligible travel vouchers to Rapid Rewards. Between August, 10, 2020 and December 15, 2020, all travel vouchers expiring on September 7, 2022 are eligible for conversion to Rapid Rewards at a rate of 78 Rapid Rewards per dollar or 1.28 cents each. Any eligible travel funds are automatically shown with their corresponding conversion rate in the Travel Funds section of your Rapid Rewards Account.
Should You Convert?
It really depends on your situation. Do you fly Southwest often? Do you fly Southwest once a year? Are you chasing Southwest status? Do you anticipate more points promotions like the double points promotion on all flights that ended August 31? Do you anticipate a devaluation of the Rapid Rewards program in the next 2 years? All of these are questions that you should consider before clicking the button to convert to points. If you rarely fly Southwest and/or you regularly book trips for people other than yourself, it probably makes sense to convert your eligible travel vouchers to Rapid Rewards. For everyone else, especially Southwest elite fliers (who can earn up to 24x per dollar on flights) and those that fly fares other than Wanna Get Away, I don't think you should do it, at least not until the very last minute.
After doing my own analysis, I am not converting any travel vouchers to Rapid Rewards. I will reevaluate my decision on December 15, 2020 and it may change. Here is my thought process: converting travel vouchers to Rapid Rewards for 1.28 cents per point seems great at first, since Rapid Rewards are typically worth 1.5 cents per point for redemptions. However, the math is not that clear. For travel you book with cash (for this analysis I mean travel vouchers), you earn 6x-12x Rapid Rewards per dollar of base fare. Scenario A is a $100 Wanna Get Away fare purchased with a travel voucher. You earn 600 Rapid Rewards (6x), worth $9 in travel. In Scenario B, if you converted the same $100 travel voucher to Rapid Rewards, you would receive 7,800 Rapid Rewards and then use 6,667 to book your travel. In scenario A, you would fly the flight as a cash fare, earn elite qualifying credits and 600 Rapid Rewards, worth $9 in travel. In Scenario B, you would fly the flight as a rewards trip, earn no elite qualifying credits, and have 1,333 Rapid Rewards remaining, worth $19.99. In this example, choosing to convert travel vouchers to Rapid Rewards earns $10.99 in extra Rapid Rewards per $100 in vouchers.
But wait, there's more! What about another double rewards promotion or an A List Preferred member? Now the example above is $18 in Rapid Rewards earned in Scenario A versus $19.99 in Scenario B. Since you're earning elite qualifying credits in Scenario A, the minuscule difference in Scenario B probably no longer makes sense. The chances of another promotion like this before September 7, 2022 is almost 100%.
Likewise, what about a devaluation of the Rapid Rewards program? While Southwest doesn't devalue its program very often, it did so three years in a row between 2014 and 2016. The Rapid Rewards program is very generous compared to other airlines and is due another devaluation in the near future. Are you willing to risk a devaluation in the next 2 years to earn an extra 2-10%? In my world, cash is king. I don't ever buy points, unless I have a specific redemption in mind. I wouldn't speculatively buy most airline miles at 1.28 cents per point and I don't plan to start now. I'll keep my cash and sit back and watch when the same $100 flight costs 10%, 20%, or 30% more in points than it does today.
Unless you are an infrequent Southwest flier, you aren't a Southwest elite, you always book Wanna Get Away Fares, or you regularly book airfare for others, I don't recommend you convert your travel vouchers to Rapid Rewards. Sure, it's quick and easy. Exactly the way Southwest designed it to be. Take a few moments, days, weeks or months to step back and think about it. You've got until December 15, 2020 to make a decision. So tell us, have you converted your travel vouchers to Rapid Rewards?