The thing is: The original 2011 idea of selling 1.67 "good as cash" cents of travel for 1 cent could never have worked. It didn't work in 2014 at 1.43 cents either. You can't lose money on each sale and make it up with greater volume.
Capacity controls were one missing element needed to make the program sustainable. That element is now being added. The other missing element needed is some "better than cash" redemption option. That element is still missing.
Without that second element, Chase would need to pay Southwest the approximate cash equivalent of each point in order for Southwest not to lose money on the deal. Chase and its customers would then both be better off with a cash back card than with the Rapid Rewards card.
I still don't see how anyone who did the math could have believed that the 2011 program plus large sales of points to Chase added up to a bonanza for Southwest. Its essence was collecting 1 cent up front in lieu of each 1.67 cents of future revenue.
This type of awards amount to a cashback, effectively. And they count on some people taking forever to earn enough points, forgetting about them, letting them expire, etc. At the time this structure was create, they also had dirt cheap fuel options so they could just mark up their flights 10% and still be competitive.
The mass selling of points to Chase seemed like easy money, and they honestly probably never suspected just how easy it would be for average person to game the system.
Now, with higher fuel costs, I've noticed they've been jacking up their fares left and right to try and negate the points usage. To the point where their fares are very uncompetitive in many cases. That's the dilemma they're in. They can't infinitely keep raising cash fares to devalue the points, since then they're not competitive against other airlines for cash bookings.