The Southwest Companion Pass as we know it is ending

Southwest Rapid Rewards Upheaval

SPEAKER_00 0:09

Southwest has hit us with some big changes to the Rapid Rewards program, including what we've been fearing for a while. An end to the companion pass program as we know it. Today I want to walk through the changes and when they'll be coming, as well as give you some concrete strategy shifts that you can take so that you can still be redeeming points for free flights. Welcome back to Points for Normal People. I'm Katie and I'm here because I know that travel costs add up, especially for a family. But I believe that travel isn't just for the rich. That's why on Points for Normal People, I share the tips and tricks that my family has been using for over a decade to help you use your everyday spending and credit card welcome offers to supercharge your travel points so that you can pay for entire vacations every year. So ever since Elliot Investment Management came into the picture with Southwest, I think we've all been wondering when the Companion Pass would be on the chopping block. We've always known it was a fantastic deal, and yes, all the best deals seem to inevitably end. Even more so when companies sell out to private equity. Now, officially, the companion pass is not going away, but the way to earn it is completely changing, which means that I think effectively, for almost everyone, it is going away. So I'm

Companion Pass Tied To Status

SPEAKER_00 1:30

going to cover the details here of not just the companion pass changes, but a few other small positive changes. And then we'll talk strategy. So here's the biggest shift. You will no longer earn a companion pass by reaching a certain number of points on your companion pass tracker. Instead, earning a companion pass will be tied to which elite status level you can reach. And it's a lot harder to reach elite status levels. Southwest for a long time has had only two status levels, A-List and A-List preferred. Now these will be renamed starting January 1st, 2027. A-List will now be called silver, A-List Preferred will now be called gold, and a new higher level is being added above gold, called platinum. At the platinum level, that's when you'll get a companion pass. The funny thing to me is that these are the exact tiers that Frontier has, and even the same names and the same unlocking of a companion pass at platinum level. So with Frontier, you can earn a companion pass if you get to the platinum status level. Which just makes me consider what if they're hoping to merge later? Now that is based on no real information, but it's just something that I've wondered as I saw this. I actually think it would be horrible because Frontier is consistently helping keep pricing down in the markets that they're in, especially with Spirit Out of Business. Now, I personally have never even reached A-list. You have to spend a lot of money on a Southwest credit card or on Southwest flights to reach those elite levels. So you get to these different elite status levels by earning tier qualifying points, which are not the same as just plain rapid rewards points. Currently, how many tier qualifying points you earn by using a credit card depends on which card you have. But the press release indicates that this is changing, and now all credit cards seem like they're going to be earning one tier qualifying point per $1 that you spend. So let's do a little bit of math here with what we know so far. These numbers might change, and frankly, most airlines do change these exact numbers to get tier status every few years or so, but this is the general idea. Right now, to get A-list preferred, you need 70,000 tier qualifying points. This means starting January 1st, you would need to spend $70,000

The New Tier Points Math

SPEAKER_00 3:50

on a Southwest credit card to get to that A-list preferred level, which will be called gold. But this is not even the level that you would need to get to to earn a companion pass. So they're saying that you won't unlock a companion pass till you reach a new higher level of status than this. So I'm guessing you'll need to spend $100,000 or more on a credit card to earn a companion pass in the future. Now it's possible that we'll see different promotions to offer opportunities where you can earn bonus tier qualifying points. We see this on some other airline cards like the United cards. It's also possible that we'll see something develop like the system that American Airlines uses with its loyalty points. With American, it has two kinds of points that you can earn: loyalty points, which count towards status, and American miles, which you can redeem for flights. And there are ways to turn this into a sort of coupon game with American loyalty points. And there's ways that people make strategic purchases to earn extra loyalty points for earning American status. So it's definitely possible that in the next year or so we will see Southwest roll out specific promotions for earning tier qualifying points to ease this transition. But as of right now, it looks like the companion pass will need an enormous amount of spending in order to get to any of these levels. And for most people, even if you have a lot of spending yourself, or if you have a business that has a lot of spending, it might not be worth locking into Southwest and focusing there with that amount of spending that you would have to dedicate. It also looks like the old standard method of opening one or two credit cards and earning a certain number of points through bonus offers to earn a companion pass essentially will be dead starting on January 1st. That's because while spending on a credit card will earn tier qualifying points, so far the terms say that the bonuses on a credit card won't give you tier qualifying points. You will be able to earn tier qualifying points, they say, by completing travel on qualifying Southwest Airlines flights. So I think this will continue to just mean flights paid with cash. You'll earn making qualifying purchases on Southwest Rapid Rewards credit cards. They've also added making qualifying purchases on the Southwest Rapid Rewards debit card. So this is new, this hasn't been true in the past, and I'll continue to be watching for the terms on what the rates are for this and if it makes sense. You'll also be able to earn tier qualifying points by completing qualifying getaways by Southwest Vacation Bookings, or completing travel on qualifying Southwest groups bookings. So a lot of those don't apply to most people.

Milestone Rewards And Limited Passes

SPEAKER_00 6:28

Now, Southwest has also announced that they're going to be introducing something called milestone rewards, which is a term that we see popping up in a variety of different programs these days. So Hyatt has these and IHG has these, as well as American Airlines. The first milestone reward I've seen listed is something that I think is not even valuable for anybody, for most people anyway. It's two preferred seat certificates or 2,000 points. The reason I don't think this is worth much is because some of the credit cards already come with free preferred seats. Then they're saying that somewhere between gold and platinum, which again, gold is the level of current A-list preferred, you would be able to unlock three companion pass trips, so a limited number companion pass. It won't be until you reach platinum that you would get that unlimited companion pass that we're used to. So overall, this all just means it's really gonna be tough to earn a companion pass.

Partner Awards And Future Lounges

SPEAKER_00 7:24

There's a few smaller positive notes that I want to mention, and that's one is that you're going to be able to use your rapid rewards points to book onto international carriers that Southwest has partnered with. So they're saying that this is going to roll out sometime in mid-2027. And the first ones will be Iceland Air, China Airlines, and Etihad. We're still waiting to see what the exact terms are around this. Southwest has announced a couple times, but announced it again, that they will be opening lounges, which will be called Southwest Icon Lounges. The first ones they say will be open in late 2027, so that's still a year away from when I'm filming this. Those first ones will be in Austin, Nashville, Baltimore, and Honolulu. We already knew this from a previous press release, but it says there will also be a new premium Southwest card that is going to give exclusive access to these lounges when they

How To Earn It Before 2027

SPEAKER_00 8:14

open. So let's talk about what you should do about this right now and what you should do about this in a few months, and then later down the road, how to strategize. If you were hoping to go for a companion pass for 2027 and 2028, your best option is to pivot and try to get one ASAP. At best, you will earn all of your points before December 31st, and then you will have that companion pass for the entirety of 2027. It's going to expire on December 31st, 2027. Southwest has said they will honor companion passes earned by the end of this year. So that's different from the strategy that we have traditionally taught because again, the companion pass as we know it and the earnings structure for it are going away on January 1st, 2027. If you want to earn it the old-fashioned way, you have to do it by December 31st, 2026. That means you want to apply for those cards as soon as you can. You want to get your spending done as soon as you can. In my Southwest Companion Pass bootcamp, which is about to be totally defunct, I also talk about changing your statement date so that your statement closes earlier in the month. That's with the old system. Because of all the rule changes right now, you would actually want to do the opposite. And what you would want to do is change your statement closing date to as late in the month as you can so that you have as long as possible in December to meet your spend requirement. If you are hoping to refer somebody to a Southwest credit card and get those points counted towards earning a companion pass, again, you would want to do that as soon as possible to give those time to post. Sometimes it does take six to eight weeks for those referral points to show up in your Southwest account. So you want to do that right now if you can. To calculate exactly how many points you personally are going to need to get a Southwest companion pass before December 31st, you have to go into your Southwest account and then go to the companion pass tracker to see exactly where you stand and exactly how many points you have to make up to get to 135,000 points this year. On my website, I have an article which I will link in the show notes that goes into the different ways that you can top off in order to reach those 135,000 points if you're just a little bit short. One of the fastest ways that you can do that is by opening a Southwest debit card, which gives you 7,500 points on your tracker, not points to spend just on your tracker. But there's some other ways too that you can add on points to your

Chase Business Card Approval Squeeze

SPEAKER_00 10:42

tracker. So unfortunately, all this bad news from Southwest comes at the same time that Chase has just made it really hard to get approved for business cards if you're applying as a sole proprietor. We've been collecting data points on this and publishing updates as we find them. So far, it's looking like if you are at 324 or above, which means if you have opened three personal cards from any bank in the past 24 months, you are not likely to get approved for any business card from Chase if you apply as a sole proprietor. If you're at 324, you could still apply for a Southwest business card just in case you can get your application through. We've seen a few isolated positive data points. If this information about 324 is new to you, that means that you're not on my email list and you're not getting my regular updates. So make sure you sign up for that in the show notes. My newsletter comes out every Saturday morning, and we try to include curated but important points and miles information on there that you need just in order to stay on top of what's going on.

Domestic Flight Strategy After Southwest

SPEAKER_00 11:45

Beyond this quick new approach to trying to earn a companion pass, where do you go from here, especially if you've been relying on Southwest for a lot of your flight redemptions, or if you've been relying on a companion pass for a lot of your flight redemptions? First, if you've been here a while, you know that I have to say, while change is hard, there are no crises in miles and points. I do believe that we will continue to see ways to book flights using points and miles. The deals are going to change, the sweet spots we know those change. But after 15 years in this hobby, I continue to see good deals every single month. With the death of the companion pass, if you will, I do think that Southwest is no longer a sweet spot. Southwest has been steadily raising their prices, and because they priced their award flights in relation to cash prices, the award flights have kept going up and up and up. A lot of the reasons that we personally used to love Southwest are gone. I really did used to enjoy flying Southwest because it felt a little quirky and also egalitarian with the seating options, and because bags flew free, there was never any fight for overhead bin space, and it felt like the employees were happy. It just doesn't feel like that anymore to me, anyway. For a lot of the families, the way that assigned seating works now makes it harder to guarantee you're getting seats together. And Southwest, unlike other airlines, doesn't guarantee that you will. As someone who travels with a person with a disability who used to get to pre-board, it also means we have to take a number of extra steps to make sure we're sitting together. So my personal pet pee is that when Southwest did away with the free bags, which they said that they were going to have forever, and then of course they didn't, every time I am at a Southwest flight at the gate, the gate agents are there guilting everybody in the gate area to gate checking their bag. Now, this is because Southwest overhead bins aren't big enough for everybody to bring a carry-on, because Southwest planes were designed with the idea that more people were checking bags because it was free to check bags. And I know they're trying to fix this and get bigger bins, but I personally really value my carry-on bag and not checking it. Every time I'm on a flight, I hear the gate agents just begging people and guilting people into gate checking their bags, saying, we really need you to gate check your bags, otherwise the flight's going to be delayed and we're going to have to just pick people at random that are going to have to check out their bags. It just makes the whole thing less pleasant than it used to be. And for me, beyond all that, my biggest personal source of grief here is losing the simplicity of just flying southwest with a companion pass, which has been our go-to strategy for 10 years. So here are some of the strategy pivots I'd recommend for domestic flights with points. It is going to be more work from here on out because there isn't one straight best option anymore. But as always, I'm going to do my best to make this as simple as I can. I'm also going to keep this general because the fact is that a lot of what is the best will depend on the points you have available and the route you're trying to fly. So there's two aspects of the strategy shift that you'll need to cover here. And yes, this all still works with my three-year plan. I'm going to do a full update on that because there's a few little changes and how it's changed. So that'll be the very next podcast episode. So one part is earning points, how your earning needs to change. And the other half is redeeming points, how your searching and booking needs to change. For earning, there's a few different directions you could go in. And these are going to influence your redemptions. One is to make sure you're not ignoring cashback bonuses. If you feel like you're running into dead ends with credit cards, you can also branch out into bank account bonuses, which earn cash back. I think most people can fairly easily earn $1,000 or $2,000 in cashback bonuses every year, either with credit cards or bank accounts with just a little bit of effort in that year. And that's a good chunk of money that's then totally flexible to use it on whatever you want. A lot of people right now in the points space over-emphasize the need to transfer points. You should always consider a points transfer, but you don't always need to do one to get a good deal. Sometimes just booking a good fare with cash and offsetting it with a cashback bonus is actually a great option. In essence, this is part of diversification, which is the bigger strategy shift here. I think it's helpful to continually diversify not just by opening cards that earn flexible points with lots of transfer partners, but also diversify by opening co-branded airline cards. Almost every US airline has at least two credit cards you can get, usually at least one personal card and one business card. And sometimes there's more than that. It's easiest to open a lot of cards for bonus offers if you mix in a good number of business cards, and we've talked about that in the past. This is easier on your credit score overall and your credit profile, since these typically don't go onto your credit report as new accounts. When you're in between cards or maybe you're waiting for a certain timing to open a specific card, co-branded airline cards, especially business ones, are a great option. What's nice is that these are somewhat spread out across a variety of different banks too. So that's going to help with approval. So you have Barclay, which has a Jet Blue business card, you have American Express, which has the Delta business cards, and they actually have three different business cards you can get. You have City, which has American Airlines business cards, Bank of America has Atmos business cards for Alaska and Hawaiian Airlines, and then you have United and Southwest with Chase. That's a lot of cards just right there. Then of course, if you're in a two-person household, you can each get each of those. Offers vary, but usually that's enough for about two round trip domestic flights or one round trip international flight. If you're not opening business cards, you do have to be watching out for your 524 count and considering your overall strategy as well. Which again, my three-year plan covers for you if you're new and not ready to develop your own strategy yet. If you've been almost always booking your award flights on Southwest with a companion pass, one of the biggest things you're losing with these changes is the simplicity of how that works. Now, getting a good price on Southwest has some finagling to do these days. And there are still a lot of little things you have to know and manage when you're booking with Southwest. But if you've learned it, you know what to do. And you probably don't price compare with other airlines anymore, so it feels simple. And so I think that's the part that's gonna feel like so much more work because the options don't just increase by one or two with this, but they seem to increase exponentially. Because especially with flexible points, you're not just adding in the possibility of booking onto a united flight. You're then considering what's the cheapest way to book onto that united flight? Is it with one of their Star Alliance partners like Singapore Chris Flyer Miles? Is it with Aeroplane Miles? Is it with JetBlue Miles?

A Tool To Pick The Cheapest Booking

SPEAKER_00 18:54

So I've been spending a lot of time thinking about the best way I can make a tool to help simplify that decision-making process, and I am very close to being done with it. And in two episodes, I'm going to walk through the process step by step that shows you exactly how to find that availability and know which way is the cheapest way that you can book it with this tool that I'm creating. That's really gonna help you narrow down your best deal for the domestic flight that you want to take. I was originally going to roll that into this episode, but then I realized it's gonna be a lot easier to have a standalone episode that covers that in depth. Throughout season three of this podcast, I covered a lot of in-depth information on specific airline program sweet spots and how you can use those to get a good deal, like how you can use thin air to get a good deal booking American Airlines flights to Hawaii. But what I never created after all that, and that is the tool that I'm about to release, will help you easily work through that decision-making process, again, based on the points that you have and the flight you want to take, so that you can answer the question: what's the way that you want to book for the fewest points out of pocket? I'm really excited to release it because I think it's gonna be really helpful even for me, which that's exactly the kind of project I love doing because it activates the problem-solving part of my brain and it also solves a problem that I

Free Course, Bootcamp Tools, Next Steps

SPEAKER_00 20:14

have. So I have a few action steps for you today as I close. First, my team and I have worked really, really hard to recently fully update our free course and move it from teachable over to being hosted on my site. This went live on October 1st, and it is better than ever and of course still free. So you can find that at Katie's traveltricks.com/slash course. And if you're new, it's a great way to get up to speed. It is comprehensive, so it's not like you can sit down and finish it in an evening, but it is basically my downloading 15 years of experience into your brain. And that takes a little while. Next, if you're planning on going for a companion pass, you're gonna have to do this quick strategy check for yourself. I rolled out some new tools in my companion pass boot camp. And if you use those, you're gonna be able to find the best path for yourself. So use the eligibility checker to find out exactly if you are eligible for the different credit cards. Then you're gonna use the card combo calculator to figure out exactly how many points you need to get and the offers that you could use in order to get that companion pass by December 31st. The links to both of those tools are also down in the show notes. Also, review the lesson on changing statement close dates because this one might be more important this year, but it's again the reverse of what we've previously taught you. Again, that's all explained in the bootcamp, and the links to all of these are in the show notes. Of course, as always, I'd encourage you to sign up for my Saturday morning newsletter. It is not super fancy, but it gets you the information, all the big and small points updates that you actually need to know. And that's also where we link any new articles, any new resources we put out, as well as new notable card offers. And lastly, if you feel like you're floundering a little bit with this abrupt change, take a few deep breaths. I feel you, I honestly had a pit in my stomach when I saw these changes, thinking about how many people they were going to affect. And I think that's even harder because of this the general economic uncertainty around us right now. There will be other deals out there, there's other deals out there right now, there's other ways to travel with points, and I'm gonna continue to be here to help you find them.