Category

Southwest

When To Use Miles & When To Get Reimbursed

Why To Avoid Cash Back & “No Hassle” Credit Cards

In the past I have talked about both the United Choices program and the Chase Ultimate Rewards 20% Bonus, and how there are certain times where you should buy Airline Tickets on your Credit Card and then have your Credit Card reimburse you by paying with Points. Normally this is when the cost of the Revenue Ticket is less than the value of the Miles / Points. Similarly, this can be especially useful when there is no Award Flight availability or the Award Flights don’t match your schedule.

This idea of getting reimbursed for your travel purchases is how most of the “No Hassle” Capital One, Discover Cards, etc work. Instead of giving you Airline Miles with United, Delta, or American, these Cards instead give you 1 Point per $1 you spend. When you go to redeem your Points, they allow you purchase whatever Airline Ticket or Hotel Room you want on your Credit Card and then reimburse you at a rate of 1 Cent per 1 Point you redeem, or basically 1% cashback.

The benefit of these programs are that you can purchase any ticket from any airline, and you will also earn miles on the flight because it is a Revenue Ticket. The disadvantage of these programs are that your Points are worth a fixed amount of 1 Cent per a Point.

If you spent $100,000 on a Capital One Card in 1 year, you would have 100,000 Points which would be worth $1,000 towards a free ticket. Whereas if you spent $100,000 on a true Airline Credit Card like the United MileagePlus Explorer or Chase Sapphire Preferred, you would have 100,000 Miles that don’t have a fixed value. So you could easily redeem those 100,000 Miles for a Business Class flight to Europe that would normally cost $5,000+.

It is for this reason that I HIGHLY suggest if you currently are using a “Cash Back” or “No Hassle”  Credit Card, for your own sake, please switch to a true Airline Card that earns actual miles. I cannot tell you the amount of emails I get from Small Business Owners that spend $100,000+ annually on Business Expenses and tell me they have been putting it on their Capital One Business Card.

The neat thing about many true Airline Credit Cards is that now most of them allow you the kind of “No Hassle” reimbursement that Capital One offers. This is on top of being able to redeem your Miles for actual Award tickets. This reimbursement benefit can provide you with a ton of added flexibility.

The Alitalia New York to Madrid mistake fare is a perfect example. A normal Economy Saver Award Ticket on American Airlines or United would cost you 60,000 Miles. With the Alitalia mistake fare, the cost of a Revenue Ticket was only $280. Therefore if you wanted to, you could purchase the Alitalia Ticket with your Credit Card like the Chase Sapphire Preferred for $280, and then get Chase to reimburse you at 1 Cent per 1 Ultimate Rewards Point. So instead of 60,000 Miles for an Award Ticket, you would only have to pay 28,000 Ultimate Rewards Points which is obviously a steal!

While this sounds great on paper, mistake fares like the Alitalia example are so rare that more than likely you won’t find yourself in such a situation. However the dilemma whether to redeem Miles, get reimbursed by your Credit Card, or pay out of pocket for a ticket, happens almost any time you need a Domestic Airline Ticket.

Example Booking Las Vegas Flights

For my 25th birthday, my Friends somehow talked me into going to Las Vegas. I haven’t been to Vegas since I was in high school when I went with my Parents. Needless to say that experience was exactly like that Hangover movie if you subtract out the bachelor party, gambling, alcohol, Mike Tyson, drug use, women, or the part where they wake up hungover…

My birthday falls around Martin Luther King Day, so Monday, January 21st most people have off for the holiday.

I was expecting Vegas to be cheap because it is Winter, but then I forgot it is a long weekend and will be 0 degrees in Chicago, so people will be trying to head somewhere warmer.

That being said, if anyone has any suggestion for Vegas Hotels or is a Big Fish and has any Hotel hook ups, please leave a comment or email me. I currently looking at Aria or Cosmopolitan, but I am not a Vegas pro, so please leave me any other suggestions or deals you might know of!

For the flights to Vegas from Chicago, as usual, I first pulled up Kayak.com to see how much the fares were. The plan is to fly out to Vegas after work Friday and preferably come back Monday night, so the cheapest fare I could find was on Spirit for $338 which I passed on.

After realizing that purchasing a Revenue Ticket was off the table, I next searched for Award Tickets by pulling up British Airways, United, and Southwest in that exact order.

British Airways had nothing available for Award Flights on American. As for United, all the Saver non-stop flights after work on Friday were sold out. There were flights with a connection in SFO for 25,000 Miles Roundtrip but because of the connection, it would be 7 hours total travel time.

 

Finally, I checked Southwest and once again they came to the rescue! I was able to find 2 non-stop tickets from Chicago Midway at 7PM after work on Friday. Since it was non-stop, the flight time was only 4 hours instead of 7 hours on United. Coming back I was able to get another non-stop flight. As usual, what makes this even better is that on Southwest checked bags are free, the flights are non-stop, the tickets are fully refundable, and for the 2 tickets it was only 20,340 Southwest Points each. That is a savings of 10,000 Miles total had I transferred my Ultimate Rewards Points to United and booked the same tickets. The face value of these Southwest flights is $799 total, so we saved a decent chunk of change.

Since there wasn’t really an option to purchase these ticket or get reimbursed with Miles, it was a fairly easy decision to use Ultimate Rewards via Southwest. That being said, some of our Friends are also flying in to Las Vegas from Boston that weekend. A few months ago I had them sign up for the Chase Sapphire Preferred, so their Las Vegas flights are going to be free it is just a matter of figuring out how to get them there.

When I searched Kayak.com for them, I was surprised to see a United flight that left Friday after work and a red-eye back to Boston Monday night for only $252. This is amazing considering the cheapest United flight to Vegas out of Chicago was $464.

When I checked British Airways for Award Flights on American Airlines, there was nothing. On United.com, there were no Award Flights that worked with my friend’s schedule. I thought Southwest might come to the rescue again, but there were no non-stop flights and the tickets also cost 25,000 Points.

So the options for my Friend was to either pay $252 out of pocket for the above United flight, pay $252 for the above United flight and get reimbursed by Chase, or transfer 25,000 Ultimate Rewards Points to either United or Southwest for an Award Ticket.

To anyone who has been doing the Mileage Game for a while, you probably quickly picked up on opportunity, but for Beginners I will explain.

Chase Ultimate Rewards reimburses you at 1 Cent per 1 Point you redeem. That being said, the above $252 United Revenue Ticket would only cost 25,200 Points to get reimbursed. Whereas if you transferred 25,000 Ultimate Rewards to United, you could also get an Award Ticket. Although the amount of Points needed is basically the same for both options, by purchasing the United ticket and getting reimbursed, my friend will earn United Miles on the flight!

To further maximize this discrepancy, I tried logging into Ultimate Rewards and seeing if you could book the $252 United Flight via their travel engine for an additional 20% off, but the flight for some reason wasn’t showing up.

Ultimately I directed my Friend to purchase the $252 United ticket with their Chase Sapphire Preferred Card. If they would like, they can then choose to get reimbursed for the ticket by redeeming 25,200 Ultimate Rewards Points. However since the cost of this ticket isn’t terrible, it might make sense for them to pay for the ticket out of pocket and save those Ultimate Rewards for a more expensive flight down the line.

Anyways unlike my Vegas ticketing situation, there are a few things that are really awesome about my Friend’s ticket purchase:

  • Earn Miles For Purchase – For purchasing the United ticket on their Chase Sapphire Preferred, my friend will get 2x Points for Travel purchases. So the $252 purchase should yield 504 Ultimate Rewards. If they were to use a Chase Freedom, this Quarter they would earn 5X UR or 5% Cashback on Airfare, so potentially 1,260 Ultimate Rewards Points.
  • Earn Miles For Flying – Since the flight is a Revenue Ticket, they will earn Miles on the flight. Boston to Las Vegas via SFO / LAX is 5,949 Miles or 4.2 CPM.
  • Earn Aegean Silver Status – As I talked about last week, if you fly 2,000 Miles on any Star Alliance partner, you can earn Aegean Blue aka Star Alliance Silver Status. This United flight clearly passes over that threshold but because Aegean only gives 50% mileage credit on discounted United fares, this United flight would only earn 2,500 Miles. That would still surpass the 2,000 Miles needed, however for those of you with shorter flights, Aegean is really generous with their Minimum Miles per a Segment. Every Segment (or Stop) you have with United, Aegean will give you 500 Miles. So in my Friend’s case, there is a stop in SFO going to Las Vegas and a stop in LAX going back to Boston. That makes 4 stops total which means 2,000 miles, so either way she will get Star Alliance Silver Status after this flight!

So for $252 or 25,200 Ultimate Rewards Points if she chooses to get reimbursed, my friend is going to earn 504 – 1,260 Ultimate Rewards Points, and either 6,000 United Miles or 2,500 Aegean Miles which will get her Star Alliance Silver!

Recap

Although this blog is targeted towards Beginners, when earning and burning frequent miles, you always want to try and see if you can take it to the next level.

In this example of getting flights to Las Vegas:

Level 1 – Getting A Free Flight to Vegas Using Miles

90% of people would be happy with getting a free flight to Vegas and could care less if it was an Award Ticket or Revenue Ticket, as long as it was free. In my case, getting an Award Ticket on Southwest was the most economical option available, so it wasn’t possible to go any further. At the end of the day I saved $799 so I was happy and called it a day.

Level 2 – Earning Miles On The Award Ticket By Purchasing It On A Credit Card & Getting Reimbursed

This isn’t something that most people even think about because they aren’t even aware it is an option. However by simply checking what other redemption options your Credit Card offers, for the same cost (25,000 Miles) of getting an Award Ticket to Las Vegas on United or Southwest, my Friend was able to purchase a Revenue Ticket that fit her schedule, get reimbursed, and earn some Miles in the process.

Level 3 – Earning Status

99% of people would be happy with purchasing a ticket, getting reimbursed, and earning miles, however by changing one tiny variable of which airline the United Miles are getting credited to, my Friend’s free flight to Las Vegas will now also earn her Star Alliance Silver Status!

Of course, to move from Level 1 thinking to Level 3, you have to know all the loopholes, however that is what I am here for.

So if you are ever booking an Award Ticket and aren’t sure if there are any other options, feel free to Email, Text, or Tweet me. I am here to answer any and all questions you might have.

Just the other day, I had a Reader who goes to Cornell ask how the free checked luggage works with the United MileagePlus Explorer Card. That simple question quickly morphed into me asking if it was a Revenue or Award ticket. Once I realized it was a Revenue Ticket, I instructed her to credit her flight to Aegean to get Silver Status in the future so she wouldn’t have to ever have to worry about paying for checked bags on United again.

-Parag

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Why You Should Take Another Look At Southwest + 1,000 Points For New Accounts

To be honest this is a post I never thought I would be writing….actually advocating that people fly Southwest.

Before my first ever Southwest Flight last month, I was in the camp that Southwest was just another low-cost airline that didn’t really benefit me.

Why would I fly Southwest in the United States when United also flies to almost all of their destinations?

Additionally since Southwest doesn’t currently fly any International Routes outside of North America, I always thought is was better to rack up United or American miles to use on International Award Tickets.

With that thinking, I avoided Southwest like the plague and never even considered signing up for the Southwest 50,000 Personal and Business Credit Cards that many people got in on.

Million Mile Secrets points out that both offers are back, so you could potentially earn 100,000 Southwest Points. 

If you can earn 110,000 Points, you earn a companion pass that basically allows a companion to fly with you for free.

Only thing to remember is that Southwest Cards are issued by Chase, so if you recently applied for Hyatt Card, then I’d hold off a month.

Why Southwest Is Not As Bad As You Think

While most people think of Southwest as a low cost airline in the leagues of Spirit Airways, I am going to beg to differ.

Southwest certainly does have some funny practices like not assigning seats and corralling passengers like animals before boarding, but after flying United and American, I have come to the conclusion that the Legacy Airlines are actually far worse than Southwest.

Southwest is cheap and they wear it as a badge of honor.

Legacy Airlines are cheap but act and charge you like they aren’t. 

Basically there are 4 major reasons I have changed my tune to Southwest.

1. Free Changes On Tickets

One thing I have never understood is why Airlines are so stingy about changing tickets.

They way they act, you would think that when each ticket is issued, they have someone carving your name into a block of stone.

With almost all Airlines, after the federally mandated “24 Hour Free Cancellation Window”, if you want to cancel or change your Revenue Ticket, it will cost you $150 or more.

Can you imagine if Hotels started implementing such a dumb policy? 

In recent weeks, the one thing that I have come to admire about Southwest is that they allow you to cancel or refund a ticket for free.

In the event that you cancel your ticket, they will either refund your points or give you credit on Southwest that is good for 1 year.

To me this is HUGE because my plans seem to change on a whim.

For example, I have a Free One Way to LA from my recent Europe Trip and I am planning on using that to get to San Francisco for the domestic part of the MegaDO in November.

Since the Free One Way is booked on United, there is no way to change the city (I’d change it direct to SFO) without incurring a hefty fee, so I decided to instead take advantage of Southern California for a few days.

However I wasn’t sure if I wanted to stay in LA with some friends for a couple days, go down to San Diego, or visit my cousin at Berkley before the start of the MegaDO.

Normally, I would have had to base my plans around the Airlines because if I commit to buying a LA to SFO ticket, then my plans are basically set in stone.

However with Southwest, you can change your plans as you would like.

So originally I thought I was just going to connect in LA, so I bought a One Way from LAX to SFO and was planning on spending the weekend in Berkley.

However then my Friends said they wanted to meet up in LA and go down to San Diego, so then I simply canceled my Southwest ticket for free and rebooked it as San Diego to SFO.

If my plans change again, I can simply switch it to another ticket free of charge!

If you are crafty, you can really use this as an easy hedging tool.

Say you need a ticket from Chicago to Seattle but the prices are extremely volatile and you think the price might drop some more.

You can purchase a ticket on Southwest, and then monitor the prices for United, AA, Delta, etc with Kayak.com’s free daily alerts.

If the price drops on the other Carriers, you can book with them and simply cancel your Southwest ticket for free.

If the prices never drops, then you have a Southwest Ticket you can use.

2. Southwest Price Based Awards 

I have talked many times before about how Southwest’s program is not based on a fixed mileage value (ie. 25,000 Miles = free domestic ticket), instead it is a variable system that calculate the amount of Points needed based on the current price of the ticket.

So for Wanna Get Away fares (the cheapest ones), every Southwest Point you have is worth $0.016.

If you want to find out the cost of a fare in Points, simply multiply the Base Fare (excluding taxes and excise fee) by 60 Points per $1.

So a $300 base fare on Southwest would only cost 18,000 Points!

That is a full 7,000 less points that with United or American for a similar flight.

The best part is that if the flight is really cheap, say only $150, it would only cost you 9,000 Points! 

Also for One Way tickets, you can get it down to as little as 4,000 Points which is a steal when you factor in the next point below.

3. Southwest Is An Ultimate Rewards Partner

Southwest being an Ultimate Rewards Partner is really what converted me over.

The reason I had never looked at Southwest before is because I never had any Points with them.

However once I realized that Southwest was an Ultimate Rewards Partner and that you can get Award Tickets with Southwest for more than 1/2 off what United and American charge, it was a no brainer.

The reason for this is that with Ultimate Rewards, you can transfer to Southwest, United, and British Airways at a 1 UR Points = 1 Mile.

That being said, if you need to get from say Chicago – Los Angeles, on United an Award Ticket would cost at a minimum 25,000 Miles (25k UR Points) but with Southwest it is based on the price of the ticket, so you could hypothetically get it down to 15,000 Southwest Points (15k UR Points) or lower.

By flying Southwest and transferring your Ultimate Rewards Points to them, you can easily save thousands of UR Points over transfering your Points to United.

4. 2 Free Checked Bags

Although many people will laugh at this, I personally think having the ability to Check Bags is important when you factor in how much money Airlines make off of this bogus charge.

Obviously most of us now just try to cram as much stuff as possible into our Carry On bag, but it can get annoying because you can’t take large liquids, etc.

Sometimes if you are a Family and traveling with young kids, there is no way you can avoid checking a bag because you have to bring their strollers, toys, diapers, etc. 

The average airline charges $25 each way for the 1st checked bag and $35 for the 2nd checked bag.

So 2 checked bags round trip would cost you $120.

If the average domestic airline ticket is $300, you are paying 40% more to check 2 bags!!!!

So your $300 ticket just became $420.

Even just checking 1 bag round trip is an additional $50 on to the price of your ticket.

What is really nice, is that even Skis and Golf Clubs can be checked free on Southwest!

1,000 Point New Account Sign Up Bonus

If you don’t have a Southwest Account, I highly suggest you create one and see how much you can save especially on Award Tickets.

Gary from View From The Wing points out that you can get 1,000 Free Points if you open a new Southwest Rapid Rewards account. 

Recap

Given how low in satisfaction surveys Airlines consistently rank, when an Airline goes above and beyond to not price gouge its Customers with ridiculous Baggage Fees, Close-in Ticketing Fees, or Ticket Change Fees, I really think the Airline should be commended.

I strongly think that many in the Frequent Flyer Community have been accustomed into thinking that you have to stick with 1 airline to get the most miles.

But in today’s day and age, most of the miles non-Elite Flyers earn are primarily from Credit Card sign ups.

I know this is 100% true for me, so it makes no sense for me to go out of my way to fly United or American on my Domestic Trips.

I don’t have Elite Status and the 2,000 or 4,000 Miles I might earn are just a drop in the bucket compared to the 55,000 Miles I can get for signing up for a Credit Card and using it once.

That being said, outside of Frequent Flyers that have top tier Elite status with American, United, or Delta, I have never heard anyone say that they absolutely love a certain any of those Airlines.

In my case, I prefer United over American Airlines, but that is only because I find United less crappy than American, aka Winner By Default. 

If Chicago was a Delta Hub, I certainly would consider them but then again Delta’s SkyMiles are named SkyPesos for a reason…

Basically the point of this post is to remind everyone that you do have a choice when you fly (for the most part), and don’t let the idea of earning Miles blind you into having a particular allegiance to an Airline when they haven’t really done anything to earn it.

Personally, since United has canceled 2 of my last 3 flights, next time I fly in the U.S, I am going to go out of my way not to fly United and will either go with Southwest or Virgin Atlantic.

-Parag

750 Points For Signing Up With Southwest

When I took my Southwest flight 2 weeks ago, I was flipping through their in-flight magazine, ironically called Spirit (the other lower cost Carrier) and saw an offer for 750 Bonus Points for signing up for Southwest’s Frequent Flyer Program called Rapid Rewards.

Rapid Rewards = Awesome

Link To Sign Up For Rapid Rewards With 750 Point Bonus

While I know Southwest is not really on the radar for most Frequent Flyers because they don’t offer true “Elite Status”, don’t fly Internationally, or a member of any Alliance, I’d still recommend signing up with their Frequent Flyer Program. 

The reason for this is because Southwest is GREAT for One Way and Roundtrip flights using Southwest Points.

Since Reward Tickets on Southwest are based on the actual price of the ticket, you can get some great deals if you need a One Way or Roundtrip flights.

This saved my butt when I needed a One Way from LAX – SEA.

In the end I only paid 7,080 Southwest Points!

Real Life Example

I need a One Way from Chicago back to LA on October 2nd.

Doing a quick search on Kayak.com, the cheapest One Ways on AA and United are $129, which isn’t terrible.

The cheapest fare on Southwest.com is also $129.

If I didn’t want to spend $129 and instead chose to use Miles, this is where the real advantage of Southwest lies.

On United and AA, an Economy Saver One Way costs 12,500 Miles and $2.50 in taxes and $75 Close-In Ticketing Fee, so $77.50 total!

If AA and United were the only 2 options for redeeming Miles then obviously it would be far better to pay $129 for a Revenue Ticket, rather than spend 12,500 Miles and $77 in taxes/fees on an Award Ticket.

With Southwest, the cost of Award Tickets is based on the price of the Revenue Ticket Base Fare (not including the mandatory Excise Tax) X 60 Points Per $1.

So depending on the Price of the Revenue Ticket, you can find some amazing deals!

So in my case, the cheapest Revenue Fare Base Fare was $118 (total was $129 with Excise Tax) which when multiplied by 60, came out to only 7,080 Points!

The best part of this is that the taxes on Southwest are only $5 with no stupid $75 Close-In Ticketing Fees!

So not only is the Award Ticket substantially cheaper (7,080 Points) compared to AA and United (12,500 Miles), but the taxes/fees are only $5 compared to $77.

And if that doesn’t blow your mind, you get 2 Free Checked Bags on Southwest…

Why This Is Relevant To Anyone That Doesn’t Fly Southwest On A Regular Basis

If you are like most Frequent Flyers (including myself), you rarely ever fly Southwest.

Therefore you might be reading this and think that it is great that Southwest’s Reward Flights are cheap, but since you don’t have a Southwest Credit Card or fly Southwest often enough to earn Points, this isn’t really applicable to you.

False!

Since the Southwest Credit Card is issued by Chase, not surprisingly, you can transfer your Ultimate Rewards Points from the Chase Sapphire Preferred or Chase INK Bold, to Southwest at a 1:1 ratio!

Link To Chase Sapphire Preferred

So in the above example, if your decision was either to use Miles for United or Southwest, it would be far cheaper to transfer 7,080 Ultimate Rewards to Southwest rather than transfer 12,500 Ultimate Rewards to United.

While One Way trips are fairly useful, Southwest really comes through on Round Trip Award Travel too.

A Economy Saver Award from Chicago to LA on United or American is 25,000 Miles.

On Southwest, the same route is only 14,160 Points!

Or in other words, only 1,660 more Points than a 12,500 Mile One Way on United or American…

Recap

So even if you don’t fly Southwest regularly or ever, I strongly suggest signing up for their Frequent Flyer Program because depending on where you are going, it can save you TONS on miles, money, and fees!

-Parag