Status is not as costly to airlines as most people think.

​​​​​Given profitability is the main driver of for profit businesses, there are other ways for airlines to achieve positive bottom line other than core revenue. Award miles balance is a financial liability, so when people use them, that is a reduction to costs, and co-branded credit cards are now a big business for airlines, so additional revenue.

From an intangible standpoint, giving people more ways to earn status does promote retention, so there is also that.

Bottom line, airlines are not charities. There are financial motivations behind what they do.