Haven't read the article, but the quote is enough to get the wheels turning. First, I don't think comparing issuance of miles with printing of money is a valid comparison. The airlines issue miles for flights and sell miles to others (hotels, car rental firms, etc.). So, at least a portion of the miles generate revenue (perhaps 40% of all miles, if I remember Randy's statistics elsewhere on these boards). The government doesn't get revenue in return for issuing money. Getting revenue for selling miles basically amounts to offering prepaid seats. In fact, AA has long cited AAdvantage as a profit center.

Second, it's true that a larger supply of miles will likely mean more demand for awards. The airlines have numerous means to control the number of awards given away. They can raise award levels, offer fewer miles, restrict travel dates/times, reduce the number of award seats, charge more for miles they sell, etc. All of these will not win over their customers.

I believe the airlines with FF programs face a much larger problem than getting people angry over the inability to redeem awards. Namely, the value of the miles themselves. Used to be everyone valued miles at about 2 cents each. Randy ran an article some time ago that basically said miles were worth closer to 1.5 cents each now. (I value mine at about 1.4 cents each.) As the perceived value of miles drops, whether due to higher award redemption values or tighter capacity controls, FFs will put less of a premium on flying their favorite airline and more of a premium on ticket price. The result is less brand loyalty and more focus on ticket price.

Another example: there are a number of credit cards on the market that offer cash back as opposed to miles. If the airlines raise award redemption levels and ticket prices hold fairly constant (effectively lowering the value of a mile), many people would likely move from a mileage earning credit card to a cash back card. Reason being that real cash, at least in my view, is better than a similarly valued mile. As more people move off of mileage earning cards, the airlines sell less miles cutting into the revenue they generate from their FF program. My bet is that they would further constrict award seat availability.

We haven't yet reached the point where miles are of less value than cash back, but it sure seems we are headed that way. Another increase in redemption levels, say from 25K to 30K for a coach seat, would be a huge step in the wrong direction. At some point the airlines will push redemption levels too high. At that point, I'll be moving my business to SW and JetBlue...anyone who offers discounted fares regardless of FF program.