Hi foxpresso -

In your case, the logic goes like this:

1) Award tickets now give EQM. Something that does not cost AS anything (unlike RDM, which is turned into flights).

2) For many people, as they approach an award level, they will say "If I just buy some miles, I will also get EQM when I get an award ticket".

3) So, EQM earning on an award ticket will induce a certain subset of the MP population to buy miles they otherwise would not do.

Think of it as the AS equivalent of "cash and points" you see for hotels and other airlines.

Southwest never had to deal with this. When they went from segments to revenue based. they just went straight to points that converts to ticket credits at set rates. No need for the intermediate step of miles and then points. Thanks to AA and Robert Crandall, everyone has had to unwind "miles" as costs went up. The fact that Alaska continues to have this intermediate step obfuscates the true cost/benefit calculation both of EQM and RDM.

That said, you can get a feel for how AS costs these out. At the upper redemption levels, you can choose either 15,000 RDM or 10,000 EQM as perks. Since we know the consumer conversion rate of RDM (.02/mile), that has value to consumers of $300. Presumably, AS is revenue neutral between these two choices, so they value EQM at .03/point.