Southwest’s Business Select tickets are a huge ripoff. Usually. Don’t buy them without reading this first.
Under the new Rapid Rewards program, you will earn free flights much faster by buying Business Select tickets. However, it was a mistake to stop there and assume it was a better deal.
Nerd-Alert Option: Skip the math and go straight to the recommendation engine.
I also want to note that over the past few years, I’ve actually become a fan and advocate of Southwest, primarily for their credit card rewards program and the ability to change flights without any exorbitant fees. (Cough, United, cough!)
For my analysis I chose a flight from Oakland to Seattle. The Wanna Get Away fare was $110, and the Business Select fare was $291.
The Wanna Get Away ticket earned 594 Rapid Rewards Points, and the Business Select ticket earned 3360 Rapid Rewards points.
The cost of a free ticket was 5940 points — so it would take 10 Wanna Get Away flights, but only 2 Business Select flights, to earn that free ticket.
Side note: the cost of a Business Select free ticket was 33,600 points — a 500% premium — which would be the biggest waste of points in the history of loyalty programs.
Side note: I measure Net Benefit in terms of dollars spent on flying, because transportation is the core product being sold. To be fair, Business Select customers also get priority boarding and a free cocktail, and the warm fuzzy feeling of being special on a plane with no First Class cabin.
Over time, the Net Benefit of Business Select over Wanna Get Away is always negative. That means if you value dollars, you’ll always be better off buying the cheaper Wanna Get Away tickets.
The little upticks on the graph are when you get to cash in your Rapid Rewards points, but those gains are never enough to outweigh the extra cost of the Business Select tickets.
In my model, Business Select ends up being around 1.85x more costly than Wanna Get Away over the long run. This shows there is some tangible benefit to earning the extra points though, as it beats the straight nominal price-comparison ratio of 2.65.
Although this is only one example, I believe it holds true for nearly every case. Southwest generally prices the Business Select fares at 1.5 – 3x as much as the Wanna Get Away tickets.
I would steer clear of Business Select unless the price is relatively close to the Wanna Get Away fare. Obviously if the premium being charged is very small, it would conceivably be worth it to pay the extra amount.
In fact, the “magic markup” — or marginal value — of Business Select is only 12%.(Not including drinks and priority boarding).
That means if the price of Business Select is more than 1.12x higher, you’re better off going with the cheaper fare.
To see if Business Select is worth it for your flight, try the calculator out for yourself here. Input the price of the both ticket options and the number of stops. It should calculate the value ratio — any number returned greater than 1 means the Wanna Get Away fare is the better deal.
ORIGINAL ANALYSIS under the “old” Rapid Rewards Program:
On this sample flight from Oakland to Seattle, Business Select tickets are $242, compared with $72 for the “Wanna Get Away” tickets. That’s 236% more, or $340 more than the cheap ‘web-only” roundtrip fare.
And let’s keep in mind that there is no such thing as First Class on Southwest.
Here are the supposed Business Select benefits Southwest gives in return for their price gouging (and what they’re really worth):
- Fully Refundable — True, the “Wanna Get Away” fare is not refundable, but if your plans change you can apply the cost of the ticket to a future Southwest flight within 12 months, with zero change fee. This is only an issue if you will only fly somewhere Southwest flies one time within 12 months.
- Priority Boarding — There is no First Class, but Southwest will let Business Select customers board first. Typically the first 15 boarding positions are reserved for Business Select. If you’re OK with row 5 instead of row 1, I might suggest Southwest’s EarlyBird seating service, where for just $10 each way you can get priority seating. It won’t move you into the top 15 but it should be a safeguard against the dreaded C-Pass.
- Fly By Priority Security Lane — I don’t think I’ve waited longer than 15 minutes for security… ever.
- An Extra .5 Rapid Rewards Credit (per roundtrip) — It takes 16 credits (in theory) to earn a free flight. On Craigslist, the roundtrip vouchers go for about $300. If 16 credits is worth $300, it reasons that half a credit would be worth approximately $9.38.
- Free Premium Drink — What does an airplane cocktail cost, $7? Alternatively, if you’re a really thirsty yet frugal traveler you can buy books of Southwest drink coupons on eBay for $2-3 per drink.
In total, Business Select costs a premium of $340 (in this example), yet only provides about $45 in tangible benefits. I think Business Select is an attempt to generate extra cash flow from un-savvy travelers who otherwise might not fly Southwest or who might be fooled into thinking they’ve added Business Class service.
Don’t be one of them.