The airlines do this because their shady accounting makes it profitable for them to do so.

To elaborate, when you earn points, the airlines don't recognize the full liablity of issuing points to you. Instead, they make some very aggressive assumptions about the availability of awards, the delay in redeeming an award, the number of people who will never accrue enough points to redeem an award, etc. This is wrong on so many levels. First, they essentially tie so many strings to the award that its difficult to say that they intend to honor the award. Second, the fact that they record a liability equal to perhaps 2-3% of the value of the award bears this out. Next, they obfuscate this fact in their reports to shareholders. Worse yet, they don't fully disclose the extent to which their promise is misleading because of capacity and other restraints.

If you look at the case of sales of points to credit cards, you can see what kind of financial incentive there is to keep this deception up. If the airline sells 25,000 points to American Express at $.02 a point, or $500, it books $500 of income but records a future liability of perhaps just $10 because of the assumptions discussed above. Bingo - $490 profit! If instead the airlines were required to book a $500 liability for those points, they would have a bigger incentive to have folks redeem and get the liability off their books.

Randy's history lesson is appreciated but I believe disingenuous. How is the fact that an award originally cost 40K or 50K miles in the 1980's be relevant to people who have a justified expectation of redeeming a reward based on promises and activity undertaken in reliance on those promises in 2003? The fact is, airlines "promise" an award today for only 25K miles, but do a poor job of disclosing the limits to their promise. Oh sure, they mention blackout dates etc but they never tell you how many awards they make available on flights and other shady practices. (e.g. DL limits European flights to departures from certain "Gateway" cities).