Very interesting topic, I was wondering several times about as well.
Are airlines internally only calculating the "variable" cost of transporting a pax?
How much would that realistically be? In the above example 140'000 miles still comes out to $ 700 - 1400 (at 1/2 or 1 cent per mile).
It appears that some airlines occasionally offer lower award levels on a partner carrier. (e.g. UA would offer a special on AC). Would that mean that UA has an over-balance of AC miles it wants to reduce?