The points are not "free" to airlines, though. (Without looking at every airlines 10k, at least one mechanism is to): Account for them as a liability on the ba

The points are not "free" to airlines, though. (Without looking at every airlines 10k, at least one mechanism is to): Account for them as a liability on the balance sheet as "deferred revenue." They then recognize the revenue when the points are redeemed, meaning they incur the same blended Cost per Available Seat Mile (CASM) as a purchased ticket. That's in addition to the significant costs of managing a loyalty program (IT, Partnerships, Legal, etc.)