There are many reasons from the (legacy) airline's perspective.

First, it makes it simpler. Look at how convoluted Southwest's new program is (you earn different rates per dollar depending on the kind of fare you buy, and you redeem different points per dollar cost of fare dpeending on the kond of fare you're redeeming for)! That makes most award charts look trivially easy for comparison!

But beyond the simplicity of the reality, even more important is the simplicity of the pitch: Ads for legacy credit cards tout "get 25,000 bonus miles, enough for a round trip award". Southwest used to be even simpler: "Fly 8 round trips, get one round trip." Now it's going to more cmplicated, at best: "Fly 10 round trips, get one round trip of the exact same type." (But of course, most people don't want the exact same type of reward trip as paid trip!)

Now, there's one way that it could be made simple and still be dollar based: Earn one point for every dollar spent, and redeem 100 points for a dollar of fare. Except:

1. It would beomce taxable, because miles would suddenly have an exact determinable vlaue. The inablity of anyone to asses the constant value of a mile is all that's kept them from bieng taxable!!!!

2. It woud be no better than using a cashback credit card. So all the marketing advantage would be lost.

3. Airlines don't want to give away seats they could sell for real money at any cost. They want to give away seats that would likely go unsold. Nebulous currencies like miles, combined with capacity controls, let them do that. Money-based earning and burning would not let them do that. So it would acually cost them more!

Which is why even when it goes to a convoluted sort of money-based scheme like Virgin America, Jet Blue, and in the very near future Southwest, it's still only somewhat money-based.

And notice that the only airlines which have ever gone to this somewhat-money-based scheme are ones which have only single-class planes. Because money-based schemes (on the redemption side0 are completely untenable for a multi-class airline (no one who ever flew economy would ever be albe to redeem for a business/first award again, and it's business/first class seats that more often go unsold and so are relatively "free" for the airline to "give away"). In the legacy world, it's common to have business (first domestically int he US) class cost only 2x to 3x the miles, even as it costs 5x or 10x the dollars. That difference couldn't be maintained with a "simple" cash-based scheme. But Virgin America, Jet Blue, and Southwest have no such thing as business or first, so they don't have this factor to worry about. I find it no coincidence that only all-coach airlines have been going to this somewhat-money-based scheme...