The theory of AP and most other FFP's is that they're never giving away seats that they feel, based on statistical modelling, are saleable for revenue. Inventory management policies reflect such.

So AP doesn't 'cost' the airline anything to offer to its customers. Hence, AP points don't have to be recorded as huge liabilities as the carrier retains the legal right of devaluation and limitation. These 'worthless' seats also allow the allusion to be maintained in the eyes of the CRA that AP points are worthless and hence not an employee benefit that needs to be T4'ed.

However, the claim of being able to redeem for free flights has to be credible enough that the customers actually believe such. So they have to match redemption levels with demand for that limited subset of unsaleable seats.

Most AP-linked credit cards have earnings that are fixed as a percentage of dollar spend, such as 1 point per dollar, or 2 points per dollar. If prices in the economy deflate significantly, AP points earning from the partner credit cards will fall, and hence, AP points earned through the use of AC services will become more dominant in terms of the overall points earning and redemption.

Despite the big FF'ers on FT who have 200, 300, 400k balances, the average points balance is not all that considerable.