Originally Posted by rc408
The miles are free. They are only a representation of a possible cost to an airline if a ticket or other merchandise is actually reedemed. If the miles are never used there is no cost involved.
Regardless of usage there are still fixed costs associated with the administration of the program. The miles are also carried as a liability on the balance sheet. There can be costs associated with carrying liabilties on a balance sheet such as being viewed as more of a credit risk which implies the cost of borrowing goes up.