FFPs are one area where I can say America still reigns supreme. Maybe the manufacturing is moving to China and the trade deficit is a wreck, but nobody does the FFP like the U.S. carriers.

Most airlines worldwide would look at it and see mostly added costs to administer the program, plus the possibility of giving away "free" tickets that might have been sold.

More to the point, the airlines probably don't have enough competition, at least in their hub, to think they have to offer a loyalty program.

As has been mentioned, though, the reality can be much more complex. You can make money from selling miles for non-flight activity. You can make money from your mailing list or e-mail list and advertising on behalf of partners. You can get people to take flights they wouldn't otherwise take, usually in seats that would go unfilled anyway, to get awards in seats that you control and also might well go unfilled otherwise. The FFP not only has the ability to take business from others, but also the ability to get new business under some circumstances.

There are also major potential secondary effects of wise SPENDING of miles for tourism. Many places I've been on awards (Majuro, Kosrae, Pohnpei, Yap, Cook Islands, even South Dakota) might well be prohibitively priced as paid tickets. I have also done many places as stopovers on big awards (such as ROR on a recent Manila itin) that didn't have enough draw to be standalones. All those places got revenue that they wouldn't otherwise have gotten.