Not sure how to "unspin" this but I think what he's saying is that United can't afford the "revenue" they'd have to pay their "partners" for giving up an award seat for United miles -- and that it's much cheaper to keep the award travel on United.
Not that this is in any way a surprise, but it doesn't do much to build respect for United as an ethical company. But then neither do any of their other sleazy practices such as
- sending out 10% off electronic coupons (Visa promotion) that when you go to book result in significantly higher than the best available fares (eg IAD-SYD is available for $1,710 but if you want to use the coupon it will be $2,380for the same flights and dates)
- putting flashy adds all over the website saying you can move up to economy plus for as little as $14 but when you go to the trouble it turns out that it can easily cost $176 for a domestic roundtrip (DCA-DEN-SFO-DEN-IAD)
Of course, if United was up front about the games they are playing with Star Alliance award bookings, that would significantly tarnish the value of United miles and could cause business travelers to book away from United.
I would very much like to know what the Star Alliance carriers charge each other for award seats -- what does Lufthansa pay United?