Now, this makes sense to me.
Their fiscal liability is one thing. Although I wonder with all the fraud in 10K's being exposed lately whether this will be an acceptable accounting practice in the future.
The value to a FFer is a lot more.
Originally Posted by JS
They also wrote that because most passengers on the plane are not on award tickets, in addition to limited inventory, revenue displacement is negligible (i.e., they assume that people on award tickets wouldn't have bought a ticket anyway if it weren't for SkyMiles). This means that their liability can be set at marginal cost only, rather than marginal cost plus opportunity cost (opportunity cost being the lost revenue because you issued an award ticket rather than selling the seat).