runningshoes, I think that you are partially correct in your assessment, and I personally think that whatever "liability" that is had is calculated in the sheer number of miles. Most airlines seem to do it this way, but it is my understanding that one or two actually do it in "awards". I also do not think it would be difficult for the airlines to figure out how many accounts are inactive for a certain amount of time (as a matter of fact miles do expire, just not if you do something within a 36 month period generally), and discount these miles. Furthermore, it would be relatively easy to do a sweep and see how many accounts are under 20 or 25 or 30,000 miles (whatever) and to discount those miles.

Remember this can be the best business in the world (externally in the mile selling business). You create a currency. You SELL the currency (which is purely electronic) to other companies at a huge profit. If it is redeemed you still make a profit. If it lays fallow for more than 3 years, you VOID it pocket all the profit.

It's like the FED!!!!