Not merely price, but also on schedule, service and amenties as they did prior to deregulation.

Frequent flyer programs work because the airline can use seats which would be otherwise unsold to reward loyalty. The key is that these seats are worth more, much more, to the passenger than they are to the airline. This has made the programs cost effective for the airlines and good value for their customers.

I think we are making the assumption that this has changed or will change soon. Reduced capacity will squeeze the otherwise unsold seats out of the system, and award redemptions will of necessity replace revenue seats.

This depends how well the airlines match capacity to demand at higher fares. I am sceptical that airlines have good models to project demand at sustained higher fares, because it's been too long since the industry has been able to implement major fare increases. Reducing capacity will lower the absolute number of seats, but they need to simultaneously increase load factors. If this proves difficult there may still be an ample supply of unsold seats.

Even if award redemptions do displace some revenue passengers it's not a damaging revenue loss because reward tickets are not "free" tickets. A material proportion of miles are purchased from the airlines by their marketing partners. Reward tickets are substantially discounted prepaid tickets. It would seem more sensible to raise redemption levels than to eliminate the programs.

I think we will see most carriers follow Delta's lead and introduce penny-a-mile redemptions in parallel with traditional fixed mileage redemptions. For example, a $650 domestic economy class ticket would cost 65,000 miles if there were no award-eligible seats allocated.