Most miles in circulation were not earned by flying. They were purchased by banks and sold on to cardholders, which makes the loyalty program a business in its own right.
The program sells a currency it also issues
An airline's loyalty subsidiary creates miles and sells them in bulk to partners, principally credit card issuers who distribute them as rewards.
Revenue is recognized when miles are sold, while the cost arrives later as a seat is provided at redemption, which separates the two events in time.
Because the issuer pays cash upfront, the program generates steady income that is largely independent of how many passengers are flying.
Card partnerships are the largest channel
Co-branded cards pay per mile awarded plus fees for acquisition and marketing, and the contracts run for multi-year terms negotiated at renewal.
Issuers value the arrangement because loyalty currency attracts affluent customers who spend heavily and hold the card long term.
Airlines value it because the revenue arrives with better margins than ticket sales and with far less exposure to fuel and labor costs.
Program economics shape redemption rules
The airline controls both the supply of miles and the price of a redemption, since award charts and dynamic pricing are set by the program itself.
Increasing the miles required for a seat reduces the liability carried for outstanding miles without any announcement being strictly necessary.
That control is why redemption values drift over time and why the amount of value in a mile is a policy decision rather than a fixed property.
Accounting treats outstanding miles as a liability
Unredeemed miles sit on the balance sheet as deferred revenue, valued using assumptions about how many will eventually be redeemed and at what cost.
Breakage assumptions matter, since miles expected never to be used are recognized as revenue rather than held as an obligation.
Expiration policies interact with this directly, and several programs removed expiration entirely, which changes the liability profile rather than the generosity.
Financing has used the program as collateral
During periods of severe stress in air travel, carriers have raised capital by pledging loyalty program assets, which required valuing the program separately from the airline.
Those transactions made public how substantial the programs are, since the valuations placed on them were large relative to the carriers themselves.
For a traveler, the practical implication is that the program's rules follow its financial requirements, and understanding that predicts changes better than watching announcements.