Please, don't link or even imply that a "good deal" using FF miles is the reason the airline business is losing billions a year. It's been noted numerous times, but apparently still needs repeating...the airline's FF programs are the most (and perhaps the only) profitable part of their business. The reason the airlines are losing money are many; poor management, fewer travelers due to a poor economy, etc. FF programs are NOT one of those reasons.

In your example, you price the airline ticket at $10K. The airline doesn't necessarily lose this revenue because you decided to use an award. If you or someone else would have purchased the ticket for $10K anyway, in the absence of mileage awards, then perhaps they did lose out. I say perhaps because it is only a loss of that magnitude if all the FC seats are full and the airline lost the opportunity to sell the seat to someone who was willing to fork over $10K. I believe this happens so infrequently as to be insignificant. And most people simply will not pay that kind of money for an airline ticket, particularly leisure travelers. Most would opt to travel on the lowest price coach ticket they could find or not go at all. That is why the incremental cost of carrying the award traveler is the correct assessment of what the airline loses. Incremental cost would be the cost of carrying the passenger (extra food/drink and fuel basically) plus some very small % of that $10,000 to cover when a plane is full and the seat occupied by an award traveler could have been sold for cash. Again, that is probably no more than a few dollars.