Southwest Sees Multi-year Slide in Rapid Rewards Flight Redemptions

In its fiscal-year 2025 annual report filed in early February 2026, Southwest Airlines reported a three-year decline in customers using points for flight awards.

The filing shows flight awards redeemed fell to 9.1 million in 2025, from 10.1 million in 2024 and 10.9 million in 2023. It also says award redemptions accounted for a shrinking share of flying—about 13.7 percent of revenue passenger miles (RPMs) in 2025, versus 14.7 percent in 2024 and 16.3 percent in 2023. RPMs are one way airlines measure demand, indicating the number of miles traveled by paying passengers.

Loyalty value drives booking choices and airline economics

Airline loyalty programs allow customers to earn points (often via flights and credit cards) and “spend” them on tickets. When fewer customers redeem points for flights, airlines may sell more seats for cash in the near term—but it can also signal less value or fewer attractive redemption options, which can weaken repeat bookings and co-brand credit card engagement over time.

Southwest’s filing underscores the scale: it reported an “Air traffic liability – loyalty program” of $4.3 billion at the end of 2025. This accounting bucket represents the value of outstanding points and related future travel that the airline still owes customers.

Revenue timing changed, and Southwest’s product is shifting

The liability number also moved year over year—Southwest reported it declined from $4.9 billion at the end of 2024 to $4.3 billion at the end of 2025—and the company explains that part of this is due to how revenue is recognized, not just customer behavior.

Specifically, Southwest notes amendments to its co-brand agreement with JPMorgan Chase affected the timing of revenue recognition (more recognized immediately, less deferred), which can reduce the loyalty liability even if redemption activity is soft.

Meanwhile, the latest operational milestone is the move to assigned seating and a new boarding approach for flights operating from January 27, 2026. This structural change ended one of the most recognized elements of Southwest’s brand, and we’re yet to see how it impacts customer loyalty.

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