On-line version of USAToday had a small article on FF programs and the possibility of doing away with FF programs. A small tid bit...

"One wonders how airlines losing billions of dollars can justify continuing giving away 10% of their seats as a sales gimmick," muses industry consultant Mort Beyer.

Beyer estimates that about 10% of revenue-passenger miles are flown "free" because frequent fliers usually cash in awards for long trips. By giving away 10% of their product, major U.S. airlines missed out on some $25 billion in revenue between 2000 to mid-2003, Beyer calculates.

http://www.usatoday.com/travel/flights/today/sky.htm

The airlines probably won't make that drastic change for the simple reason that no airline wants to be the first to go out on that limb and hang itself. I could see the mileage redemption rates going up though.