Well, yes and no. I though about that for a while. The company that runs the Customer Retention Program/Frequent Flyer Program/Miles Scheme has to put money aside for miles earned by customers anyway. (Would that be what they call "Provisions" in IFRS?) Because, some day, some miles will be used for something which costs money. (One of the reasons why miles expire is to limit this stack of horded money.) That way, you probably get some high value mileage millionaires to become share holders, and not John onceayearholidayflightineconomywithchildren Doe.

Instead of retaining the money for this future expense, the same amount of money could be labelled as retained earnings and thus become new equity. New shares would, at max, reflect this added equity (probably less).

So the relation share<=>equity would not become worse (and most likely even better). However, there is usually some "phantasy" in a share, so a share of a company is often more worth than the according fraction of the equity. So javacodeguy is not completely wrong: A system like that might delute the value of previous share holders.

Then again, if the system is successful, the airline will become more profitable than without this system, increasing the value of each share.

So real life calculations by an expert in this field would be interesting to read. :-)

I see many possible variations on the topic: For example, when an airline needs to raise new equity: They could invite some of their frequent flyers to buy equity with miles. We all know that certain miles have a certain internal value, so that wouldn't be too difficult.

Another possibility would be an auction of shares or stock options for miles: "One bid sealed auction. We have 100.000 shares to give away. How many do you want (max 1.000), how many miles do you bid per share? We will distribute the shares in a way that maximises our profit. T&C apply. Your broker might charge extra fees to add these shares to your portfolio."