Southwest Airlines shared data with the SEC that should raise flags about how things are going for its loyalty program. Its fiscal 2025 10-K filing just released shows that over the past 3 years, Southwest has seen a significant trend in customers redeeming fewer awards. A smaller percentage of their seats are taken up by passengers using their points.
The table below shows the number of flight awards redeemed for each of the past three years.
Year ended December 31, 2025 2024 2023 Flight awards redeemed (millions) 9.1 10.1 10.9 For 2025, 2024, and 2023, Customer redemption of flight awards accounted for approximately 13.7 percent, 14.7 percent, and 16.3 percent of revenue passenger miles flown, respectively.
And now, with those points worth less overall (as part of the broader set of changes made by the airline) we may see even fewer redemptions still.
Meanwhile, Southwest reported liability for total Rapid Rewards points outstanding of $4.3 billion:
As of December 31, 2025, the loyalty liabilities were approximately $4.3 billion, including $3.1 billion classified within Air traffic liability and $1.2 billion classified as Air traffic liability – noncurrent.
Even with fewer awards redemeed, the outstanding points liability went down. Southwest’s FY2024 Form 10-K reported that as of December 31, 2024, loyalty liabilities were approximately $4.8 billion.
Some of this is the result of accounting changes that are goosing current revenue at the expense of future revenue, because their amended credit card deal with Chase lets them book more of the money up front, allocating less towards future travel.
Since they added seat fees and bag fees, and the credit card provides benefits waiving some of those fees, they get to count some of the money towards those things. But that’s not all of what’s going on here. People appear to be earning and redeeming less. That’s concerning!
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