Southwest 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.
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!)
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Your next option to fly Southwest for free is the Chase Sapphire Preferred card.
This card offers 60,000 Ultimate Rewards points as a sign-up bonus, after spending $4000 in your first 3 months. Those 60,000 points are worth $750 when redeemed through Chase’s travel portal, but the cool thing is Ultimate Rewards points transfer 1-for-1 to a bunch of different travel partners — including Southwest.
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Calculating the Net Benefit of Southwest Business Select
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.
When to Buy Business Select
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.
Want to fly free? I think the Southwest credit card is well worth it.
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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):
1. 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.
2. 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.
3. Fly By Priority Security Lane
I don’t think I’ve waited longer than 15 minutes for security… ever. Or just invest the $100 for 5 years of Global Entry / TSA Pre-check.
4. 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.
5. 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 $45 in tangible benefits. I think Business Select is an attempt to generate extra cash flow from un-savvy travelers who otherwise might not fly Southwest often or who might be fooled into thinking they’ve added Business Class service.
Don’t be one of them.
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Nick,
Consider yourself un-savvy and not so economically inclined. What you completely fail to mention in your blast of this rewards structure, is the fact that when you buy Business Select, you earn 12 points per dollar spent, rather than just 6 points per dollar spent on your Wanna Get Away ticket. I’ll assume you are not a rewards member.
Thus, economically, it becomes a question of cash flow and return on investment. If you do the math, the NPV (net present value) of the Business Select option is actually greater than that of the Wanna Get Away ticket.
In more consumer laymen’s terms: When you spend 299$ on a Business Select ticket, you earn 3456 points, versus ONLY 642 points gained from your 118$ purchase of a Wanna Get Away ticket. Effectively, purchasing a 299$ ticket is the equivalent of spending $3,456 on your Premier Rewards card. In contrasting the two options, you spend roughly $180 more, and receive a $2,814 in what would have been purchases to match the points you gain at that level.
Economically speaking, Business Select offers you great benefits, particularly if you have the extra cash flow on hand to front the cost increase.
Excellent analysis — this post was written before Southwest switched over to the new points system. I think you’re right, it’s a better deal now. You earn points at 12x per dollar on Business Select and can redeem them at 6(0)x for flights. In one example I ran, you could earn a reward flight for half the cost buying exclusively Business Select tickets vs buying only Wanna Get Away.
I read it real thorough and called. They lead you to believe is a business class ticket, but its just an expensive coach ticket, SW does suck in so many ways
Considering you can buy Rapid Rewards points for at most 3 cents each, you’d still be better off just paying a la carte for the various benefits of Business Select.
I think you also miss the point that not everyone is buying in advance or during a sale. So if you are purchasing a ticket only 3 days before the flight and it is a full Y fare for $227 – it is only $15 more. Which is a good deal for the early boarding, and the drink, let alone the bonus points. Thanks!
Absolutely right — in my new post this week I found if Business Select is within 12% of the other fare, it’s worthwhile to upgrade.
Maybe I am not seeing something, but I cannot for the life of me see how the difference between $242 and $72 is $340… I too agree that if you can afford it, the free flights come much more frequently that way and you don’t have to spend the extra on the perks you get free.
Hi Stacie, thanks for the comment. The $340 is based on the price difference for buying a round trip ticket, where the $242 and $72 values were one-way fares. Yeah I re-read that — it was definitely poorly worded! Sorry!
Does the upgrade have more leg room, and what’s the cost? I’m flying in feb 2013
The cost difference is shown in the grid when you’re pricing your tickets. There is no more leg room.
I have never flown Southwest, just seen the ads for Business Select. How does it compare tp other airline programs? Whats the difference between early bird and Business Select? It sounds like boarding for Southwest is more like a cattle call. Just wondering….thanks!
Honestly, the business select even with earning the extra point is a rip off. Yes you may gain a free one way trip for a wanna get away fare, however you are paying for it.
So if I spend 600 dollars for business select, I may be getting about 150 back through a wanna get away fare. However, even if you are getting more points, the cost isn’t worth it. You’d get more flights through want to get away fares versus through business select. Especially when you get two free checked bags and a seat on the plane regardless of boarding. Now I may be willing to pay a bit more if the seats were of better quality like the ones on airtran for their business class or if they offered more ‘free’ checked bags.
Lets do the math shall we. For instance lets say I want to fly from Milwaukee to Washington DC over fourth of July weekend.
So if I fly from the 30th of June (sunday) and return on the 7th of July (friday) A one way segment of business select or a round trip is about 670 dollars. Personally with that I’m earning about 7,512 points. Which a one way Get Away fare is going at about 6,600 points or in cash about 125 dollars.
So to do the math I pay 670 dollars-125 dollars which is 545 dollars for your round trip flight as business select. So I can spend 670 bucks for a round trip when I could spend 125 and receive about 5 one way trips off of that for the value of 670 dollars. So 125 times 5=625. I would only be receiving half of 7,512 points as the base is by 6 instead of 12. However, I’m receiving much more for my value of the dollar to pay less in cash to get a round trip flight versus getting ‘more’ points by flying business select.
I do realize that I am a bit late when it comes to this article haha, however, I think that the comments are just as valuable to a reader as the article is and since this article still seems to be pretty popular, I’ll leave my thoughts :)
So I completely agree with the author when he says that some people buy business select without some research and think they might be getting a “business class” ticket when this isn’t so. HOWEVER, if you’re anything like me and take last minute trips fairly often or just are horrible at planning and end up buying tickets the week before or even of your trip, business select is TOTALLY worth it in my mind. Lots of times, the “wanna get away” tickets are sold out and the difference between the regular ticket and business select is usually somewhere around $15. I had always figured, nah, I’m not gonna waste money upgrading, I’m a big girl, I can handle not being first on the plane! Recently though, traveling has become so frequent for me and I fly southwest most of the time. I do love southwest for many reasons, but the fact that I inevitably get stuck with the dreaded C (or low B) loading group is not one of them! Trying to get on the plane, basically carrying all of your belongings directly in front of you or above your head to avoid hitting those poor passengers in the aisle seat that look at you with faces that have undoubtedly been smacked with a diaperbag or two already, is trying. Waiting a half hour to get off the plane because for some reason getting their bag out of the overhead compartment is too complicated for some people is more frustrating than it should be. And if you’re an unfortunate soul stuck in a middle seat(well, okay maybe this is just for us heavier souls stuck in the middle seat), sitting with your shoulders practically dislocated so you dont take up too much of your neighbors space is just not okay. Getting on first is such a luxury and being able to skip the lines at security is wonderful if you have to travel at one of those terrible times.
Bottom line, if you book early enough, earlybird check in will be a suitable(and very useful) option. If you book late, like me, swallow it and spend the $15 to upgrade. You will be glad you did!
Excellent analysis — thanks for stopping by!