Since the announcement last week of Southwest Airlines’ new Rapid Rewards 2 program there have been a number of comparisons drawn to the other frequent flyer programs that operate under similar premises, namely revenue-based earning. Certainly not everything in the Rapid Rewards 2 program is revenue-based but a lot of it is. And the program is strikingly similar to the TrueBlue program from JetBlue. Just take a look at the comments of Dave Canty, JetBlue’s Director of Loyalty Marketing and Partnerships:
Just looking at the new SWA program, it’s almost identical to the JetBlue TrueBlue program, we are flattered and you’re welcome Mr. Kelly
Mr. Canty is correct; there are a number of similarities in the two programs. But there are also a fair number of differences, enough such that it is worthwhile to compare the two programs in detail.
Earning Points by Flying
Both programs see members accruing points based not on the distance of the trip but based on the amount paid for the airfare. In the TrueBlue program the earning is fixed at 3 points/dollar and doubled to 6/dollar if one buys the ticket at JetBlue’s website. Southwest’s new Rapid Rewards program has three earning levels – 6, 10 and 12 points/dollar spend – based on the type of fare. More restrictive (and generally cheaper) fares are worth fewer points while the fully refundable Business Select fares are worth the most. While most leisure customers will likely see their earnings at 6 points/dollar in either program Rapid Rewards 2 offers more potential upside in earnings, particularly for big spenders.
Earning Points with Partners
Thanks in large part to having been around much longer, the Rapid Rewards program has significantly more earning partners than TrueBlue does. Moreover, the earning rates with the partners appear to be better for the most part.
Both programs have Hertz as a rental car partner. Rapid Rewards also has Alamo, Avis, Budget, Dollar and Thrifty. For all of their partners Southwest credits a flat 600 points per rental, the equivalent of $100 in airfare spend on the cheapest fares. In TrueBlue a rental with Hertz will net between 50-300 points, the equivalent of $9-50 in airfare spend*.
Southwest’s Rapid Rewards is much more lucrative for accrual with rental car partners.
Currently TrueBlue has Hilton HHonors as an earning partner at the rate of 1 point per $2 spend. Rapid Rewards has Best Western, Choice, HHonors, Hyatt, La Quinta, Marriott, Starwood, Wyndham and the Venetian as hotel partners in the new program. Each of those partners will earn a fixed rate of 600 points per stay.
Once again, the Rapid Rewards program appears much more lucrative for accrual. If you are spending more than $1,200 on a stay and staying at HHonors-affiliated hotels then TrueBlue will net more points.
Both programs offer a loyalty credit card for earning additional points. Both cards offer one point per dollar spent at most merchants. Both also offer two points per dollar when used to purchase airfare from their affiliated airline. The Rapid Rewards card also includes bonus points each year when the annual fee is paid. There is a premium card available on the Rapid Rewards side that can also earn Tier Qualifying Points (more on this later) for spend. The JetBlue card also offers bonus points for spend in certain additional categories, including gym memberships, restaurants, movie theatres and event tickets.
Overall this earning path seems pretty even; each has minor advantages but not enough to skew towards earning in one program or the other.
Earning points is all well and good, but if they cannot be redeemed for anything then they have no value. Understanding the redemption side of the process is arguably more difficult – and more important – than the earning side. Both Rapid Rewards 2 and TrueBlue offer variable rates for redemption. In other words, the value of the points will vary depending on the award in question.
With Rapid Rewards the number of points required is determined by the type of fare requested. The cheapest, Wanna Get Away fares cost 60 points/dollar while the (generally) most expensive, Business Select fares cost 120 points/dollar. This provides a range of point values between 0.83 and 1.67 cents each. One of the most significant drawbacks to the Rapid Rewards program’s redemption costs is that the WGA fares often have advance purchase requirements. For a last minute award – historically one of the best values because of the generally higher airfares – this means that the awards will likely cost notably more.
TrueBlue does not explicitly define the points required per dollar of fare. Indeed, the same same exact dollar fare can see the number of points required for redemption vary by more than 30%. The points range in value between 0.95 and 1.35 cents based on my most recent analysis. Generally speaking, the points are worth less as the scarcity of seats increases (e.g. higher fares or the last few seats on a plane) and worth more when there are more seats available or the fares are lower.
It is also important to note that the value proposition becomes even more skewed as the underlying fare increases. Not only are you paying more dollars but also more points per dollar. This “double whammy” can add up in a hurry. If you are able to find a discounted fare far in advance then the Rapid Rewards program seems to offer up better value per point. If you are more likely to be redeeming on higher cost tickets or last minute the TrueBlue program appears to have an edge.
JetBlue serves far fewer cities than Southwest does but many of those cities happen to be outside the United States. That can be nice depending on your travel goals. The new Rapid Rewards program will offer redemptions on other airlines, including international destinations, but only if you also hold the co-branded credit card and the other details – like the all-important redemption rates – remain unknown. JetBlue has interline agreements with a number of airlines for additional route coverage but none of them offer redemption opportunities for now and that is not expected to change in the next 12 months.
Airline loyalty programs are designed to keep a customer’s attention (and wallet) in one place. For the most frequent customers this means perks and bonuses as part of the process. Both Southwest and JetBlue have aspects of their programs that reward their most frequent customers, though the way they are implemented varies quite notably.
Southwest has taken a more traditional approach to rewarding their most frequent customers with the A-List and A-List preferred programs. Qualifying for the programs can be accomplished either through the number of one-way trips flown (25 or 50, respectively) or through the accrual of Tier Qualifying Points (“TQP”). Much like the Elite Qualifying Miles in legacy programs, TQPs are based on the amount spent on airfare and exclude points earnt via hotel, car rental or most other partnerships. In the Rapid Rewards program a member who also holds the premium version of the co-branded credit card will also earn 1,500 TQPs for each $10,000 in spend, up to a maximum of 15,000 TQPs annually. Qualifying for A-List or A-List Preferred will require 35,000 or 70,000 TQPs, respectively. With respect to bonus points, A-List members will earn a 25% bonus on all flights taken after they qualify; A-List Preferred will earn a 100% bonus.
JetBlue does not currently have an elite status program. That said, they do offer up bonus points to repeat spenders in a manner similar to the elite programs of their competition. The “elite tiers” as they currently exist in TrueBlue are based wholly on spend and increment at each $500 in airfare purchased (assuming online). The first $500 in spend realizes a “Go Big” bonus of 16%; not great but way better than one will realize in most other programs. The next $500 sees a bonus of 33%. Spending $1,500 sees another bonus, this time of 67%. Every $500 spend in addition through the year generates a 133% bonus. That’s rather significant over time.
In addition to the Go Big bonus there is also a “Go Long” bonus that rewards passengers flying longer routes. JetBlue actually improved this bonus (rather quietly, I might note) in November 2010 to cover nearly double the number of flights it used to. There are now over 40 routes where this bonus can be accumulated. Fly 10 long flights in a 12 month period and you earn 10,000 bonus points. This is in addition to the Go Big bonus that you were likely to earn for spending enough to fly 10 flights that long.
From a strictly bonus points perspective the TrueBlue program appears to be more lucrative. The first $1,000 in spend on TrueBlue will net 1,500 bonus points while it will net nothing for a Rapid Rewards customer. If a Southwest customer can find 25 one-way trips at $60 each then they will reach A-List status and future flights for the same $1,500 spend. On JetBlue the next $1,500 will earn 10,000 bonus points, a quite solid return. In Rapid Rewards that spend would net 2,250 bonus points. Again assuming the same $60/trip spend the Rapid Rewards member would now be A-List Preferred. Future spend would be rewarded with a 100% bonus earning. In the TrueBlue program that same future spend would be rewarded with 133% bonus earning.
One caveat to the above numbers is that the TrueBlue bonus thresholds are fixed; one only receives a bonus for passing the delineated level. This contrasts from the Rapid Rewards program where the earning happens on every flight once the status tier has been reached. Using the above examples a TrueBlue customer who realized only $4,495 in spend rather than $4,505 would have 4,000 fewer points; for a Rapid Rewards customer that number is 30. So TrueBlue offers a much higher up-side but also a more significant risk of not realizing the bonus points.
While not strictly an elite level, the Rapid Rewards program also offers their Companion Pass for their most frequent fliers. At 100 trips or 110,000 points accumulated in a year a passenger will be able to designate a companion who can fly for free with the paying customer. This is a huge benefit if you fly a ton. JetBlue’s TrueBlue program offers nothing close to this award.
If you were hoping to get to the end of this analysis and have me state that one program is decidedly better than the other, sorry for wasting your time reading. The simple answer is that they both have their advantages.
JetBlue makes the points worth more for a passenger who is purchasing cheaper fares and who does not generally have a lot of hotel or rental car partner activity. From a straight discounted flying perspective the points accrue more quickly with TrueBlue and the redemption values are, on average, better because the range of point values is narrower and a bit higher at the low end.
Rapid Rewards is decidedly better for folks buying refundable/Business Select fares and folks who have a lot of hotel and partner car activity. Even with the potentially higher redemption prices the higher earning potential means you’ll accrue points faster to get there.
At the end of the day, if you live in New York City the TrueBlue program makes way more sense just based on the availability of flights with JetBlue versus Southwest. Boston is a bit more of a mixed bag. For other folks Southwest is likely more compelling anyways just based on better flight options and routes.
If international travel is your thing then JetBlue provides more options at reasonable rates; until the additional details are known regarding the Rapid Rewards international partners that cannot be believed as having much value.
*There is a promo on right now between Hertz and TrueBlue for longer rentals where you can earn more points but I’m trying to compare the base programs as much as possible.
- Southwest launches new Rapid Rewards program
- TrueBlue 2 is alive!
- TrueBlue2 Details – this time without all the assumptions
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Thanks for taking the time to write this help look at the two programs. It’s worth mentioning that Southwest frequently has its own car rental partner promos offering three or four times the normal points, and some of those partners (including Alamo) let them be combined with other coupons that make for a cheaper car rental. Assuming that these remain in place, it will continue to make Southwest a more appealing option for car rental frequent flyer credit.
I agree, Noah. Even without the bonuses Rapid Rewards will still be a much better option than TrueBlue for crediting rental cars. The real question is whether that’s enough to keep one loyal to the scheme as it migrates to the new spend requirements. Redemption costs are definitely going up so even triple credits make it a harder program to scheme and profit from. With some of the other rental car promos out there, particularly those on multi-day rentals, it might make sense to check some of those out, too, before continuing with the Rapid Reward program.
FT member sdsearch points out that the new structure will tempt hotel and rental car partners to decrease their bonuses. Under the old system the smallest practical bonus was 0.5 credit, but now it can be as small as the partner wants it to be.
In other words, we should not depend on partner bonuses remaining at their current levels for long.
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