Originally Posted by
broog
So amex does pay the airline something. Ok, but who ends up paying after that? Its an expensive seat that could have otherwise been sold for $$$. Would it be the airline that the reservation was made through, or the partner airline that was actually flown?
An empty airline seat and an unbooked hotel room are the most perishable, high-priced merchandises.
Award seats are capacity-controlled, and if you book the Saver Award, you only get the seat when the yield management softwares determine said seat would remain unsold most likely - hence it is released for award booking.
The airline which miles you used to claim the award would pay the partner airline you will fly on, an agreed-upon price for the seat you redeemed. It is a reciprocote agreement among partners who signed into an alliance. Needless to say, the formula to calculate such cost is a highly guarded business secret.