1. It's a matter of reference. Even with the 40+ margin airlines put over the miles price, banks put even more. In the end the one who is paying for it is the c

1. It's a matter of reference. Even with the 40+ margin airlines put over the miles price, banks put even more. In the end the one who is paying for it is the consumer. Also, this mileage programs are made by contract over a period of time, and airlines usually don't have contracts with different banks. This lack of "liquidity" makes it harder for banks to have an upper hand in negotiations. 2. Airlines have different ways of calculating the cost, but usually they use the normal price as a proxy for the redemption price. Airlines actually can charge less than the cheapest fare because they segment their consumers by travel patterns and (sort of) split the flight total seats into this different segments. So they have a certain quantity of seats alloted for redemption passengers at X price, another for Y price. This would become a long reply if I explained in detail, but I suggest you search for "Revenue Management" or "Yield Management", as it is very interesting to see how airlines do their pricing. 3. Yes. Absolutely! Even after being in the industry (I worked with Revenue Management for a Latin American airline), I still love a good mileage program. I even choose my banks over it.