Dirty_Idea

To generate brand loyalty, repeat sales and word of mouth advertising? To give a perception of value for money? To boost income during leaner periods and periods of higher competition through Skywards members' investment in the brand?

More simply, a rewards program is a long term branding exercise and an investment. One that is perceived as unfair still has costs involved (accrual of all miles currently being earned) but with much reduced benefit for the company. They should be giving up seats for free regularly, even if they could sell them, because it increases the value of the program, which increases the perceived value of the product and the standing of the brand. The point I'm at right now is I am looking for flights with other airlines because my perception of Emirates has lowered on the basis of this. The cost of one reward flight has likely lost them 2 or 3 returns this year. Once I have points with another airline I am likely to stick with them as I have an investment there. You don't get much more prized customers than those who stick around and pay a premium because they are invested in a brand.

IMO the mistake airlines make is the "coupons" approach where everything and anything earns you points. That makes the reward flights feel like a liability that has no future value for the airline. Nothing could be further from the truth. There's a big chunk of semi-regular business travelers who will stick to one airline for status and miles who are right now at the point of aligning to a brand for the next half decade. You'd be a fool to reduce the value of the product you offer to them at this point.