Reported segments flown tied back to reported flight ticket coupons, as financial settlement mechanisms existed for the airlines even before Carter approved airline deregulation spurred FFPs into what they became. But process limitations, including those related to technology and costs, indeed made tracking customers business simpler on some lines than other lines. But miles rather than money was for a market where point-to-point service wasn’t as much of a competitive concern for the deregulated airlines as competition against other one/multi-stop connecting service providers.

The airlines had excess capacity, and retail consumer-oriented FFPs allowing for customer use of that excess capacity on the basis of prior business was like giving funny money as a rebate instead of giving real cash back as a rebate. The tax consequences upon customers didn’t seem to be a major factor at the start as the airlines have been giving USD-denominated rebate commissions back to “loyal customers” for even longer than there have been retail customer FFPs; and other loyalty programs giving USD-denominated rebates limited to a funny money market place has been going on for as long as we’ve had an IRS.