Of course - but I don't think EK is pushing up fares because they are forced to, I think it's because they think there is enough business out there that will pay their prices regardless of having a FFP - perhaps they have done an analysis of their customer base and see that their most frequent travellers are booked via corporate TAs (and therefore have little influence in the purchasing decision - it's purely a price/volume thing) and/or that their premium travellers are once a year visiting friends/family travellers, who aren't interested in loyalty schemes either. Thus my point is that EK is competing on offering and trying to extract higher margins out of their fares, through a combination of reducing incremental costs of a pax and by fare inflation.

There are of course many exceptions and many of them are represented on this forum - but to answer your question - the incentives to book EK are targeted at people who have loyalty scheme considerations way down their list of priorities: they are prioritising price, connectivity, schedule and product. If there are a few casualties on the way as part of that shift, then they regard it as a small price to pay (perhaps because they project that there will be a critical mass of carriers now shifting to this kind of program, where margin is rewarded, not frequency/mileage, and so in the end they have to focus on their offering and people will come back to them).