Southwest Airlines is celebrating a major milestone today, and employees are the big winners.
Southwest Airlines’ anniversary gift to employees
Southwest Airlines is today celebrating its 50th anniversary, as the beloved airline operated its first flight on June 18, 1971. The airline celebrated this special occasion with an event for employees.
During this event, Southwest unveiled a Boeing 737-800 in a special new “Freedom One” livery, with a stylized flag of the United States of America, intended to honor veterans and those currently serving.
On top of that, Southwest offered a gift of 50,000 Rapid Rewards bonus points to all 56,000+ employees. Employees who choose to accept this gift will have them deposited in their accounts later this year. If every employee were to accept this gift, we’d be talking about 2.8 billion additional Rapid Rewards points in circulation.
How much are Rapid Rewards points worth?
How much is this gift of Rapid Rewards points worth? Rapid Rewards is a revenue based frequent flyer program, and it takes about 83 points to redeem for one dollar of airfare. In other words, 50,000 Rapid Rewards points could get you roughly $600 worth of airfare on Southwest. If all employees were to accept the gift, that would be about $34 million worth of airfare.
While Southwest Airlines employees get a big gift of points, customers were meanwhile hit with a devaluation to Rapid Rewards points a couple of months ago, meaning that points are worth less than they used to be. Perhaps that’s how this gift is being funded? 😉
Why some employees may not accept this gift
This gift won’t automatically be given to employees, but rather employees will have to opt in to receiving this. Presumably that’s because of the tax implications of this reward. I would imagine that this gift is valued at somewhere around $600, so it will be taxed equivalent to that amount of income.
If you’re in a low tax bracket then you probably won’t be on the hook for much, while if you’re in a higher tax bracket that “gift” could cost you $200+.
The catch is that Southwest employees and some family members already get space available (nearly free) travel on Southwest, so the points aren’t as valuable as they’d be to someone who doesn’t work for the airline. That being said, I know a lot of airline employees understandably value positive space, guaranteed travel, since playing standby roulette can be frustrating and unreliable.
Furthermore, presumably Southwest employees could redeem their points for friends and family, including those who may not otherwise be eligible for travel benefits on Southwest. Even with tax implications, I’m sure this would prove worthwhile to a vast majority of employees.
Southwest Airlines is celebrating its 50th anniversary by giving all employees 50,000 Rapid Rewards points. That’s a huge gift that can get you $600 worth of travel, and we could see up to 2.8 billion new Rapid Rewards points issued, worth around $34 million in airfare.
That’s a very generous gift, and I’d be curious to know how many employees end up choosing not to get those points. Happy anniversary, Southwest, and congrats to all employees!