Southwest Rapid Rewards - The value of one RR point

I made an award booking today, CMH-BWI. The fare was $127.60, or 6360 RR points + $5. $122.60 / 6360 yields 1.927 cents per RR point. This is surprising to me, as SW tells us RR points are worth 1.67 cents each.

I checked other itineraries, and the value of a RR point is consistently around 1.9 cents.

Thoughts, anyone? Did SW recently change the way it figures up taxes and fees?

In January the government required airlines to quote cash fares inclusive of all taxes and fees, but the formula for award trips is based on the pre-tax fare, 60 points per dollar as previously quoted (including the excise tax but not the PFC, security, and whatever other tax was added on). So it looks like the pre-tax fare for that trip was $106.

When figuring the value of SW points I subtracted the Government fee and came out with something like 1.62-1.63 cents per point. Is this correct? I see most people valuing the points at 1.67, but it doesn't include the government fee you have to pay. Thoughts?

Could you give an example? What fee did you subtract?

In January the government required airlines to quote cash fares inclusive of all taxes and fees, but the formula for award trips is based on the pre-tax fare, 60 points per dollar as previously quoted (including the excise tax but not the PFC, security, and whatever other tax was added on). So it looks like the pre-tax fare for that trip was $106.

Ok, thanks for that info. Makes sense. I still think the value of one RR point is around 1.9, because that reflects the money saved by using points instead of dollars.

I subtracted the government fee. $2.50 for each leg of the trip. Since you have to pay this out of pocket I wanted to get a value of the points subtracting that fee to get the true out of pocket value. Does that make sense?

I subtracted the government fee. $2.50 for each leg of the trip. Since you have to pay this out of pocket I wanted to get a value of the points subtracting that fee to get the true out of pocket value. Does that make sense?

You're right that you have to pay the Sept 11 security fee for $2.50 per segment, up to $5 per one-way. However, you have to pay this fee if you purchase a ticket anyways.

The point redemption rate is based on the base fare excluding taxes taxes and fees. The 1.67 cent per point value comes because each dollar of base fare costs 60 points. Since you don't have to pay taxes with award tickets, you actually end up getting a slightly better value than that.

Ok, thanks for that info. Makes sense. I still think the value of one RR point is around 1.9, because that reflects the money saved by using points instead of dollars.

When taxes are a high proportion of the total fare, the value of one RR point increases, since, as rove312 stated above, redemption rates are based on pre-tax base fares. When the ticket is expensive, and hence tax is a smaller percentage of the total fare, the value of one RR point tends closer to 1.67.

You're right that you have to pay the Sept 11 security fee for $2.50 per segment, up to $5 per one-way. However, you have to pay this fee if you purchase a ticket anyways.

The point redemption rate is based on the base fare excluding taxes taxes and fees. The 1.67 cent per point value comes because each dollar of base fare costs 60 points. Since you don't have to pay taxes with award tickets, you actually end up getting a slightly better value than that.

You're absolutely right. I used the calculator on the milevalue.com page and it turns out that it is an excellent value for short flights i.e. RDU-FLL and a subpar value for longer ones, i.e. RDU-SAN. http://milevalue.com/milevalue-mile-value-calculator/

You can get up to almost 1.9cpm on the shorter flights and as low as 1.45cpm on the longer ones. Does my math sound about right?

It's possible to argue that the value is significantly higher than 1/60th of a dollar due to the cancellation policy.