Auctioning flights, using airline miles as currency?

I've been reading that loyalty "miles" programs have been too succesful - huge numbers of miles are being accumulated against a fixed set of air travel flights, and "free" flights are slamming airline balance sheets in both operations and as an overhanging liability.

An airline response of narrowing the available set of flights on popular flights is no good - that just defers the redemption until a time when operational costs have climbed further. And, the overhang will keep growing ... available seats on unpopular routes are probably available for a reason!

Instead, the response has to take advantage of the that airline miles are effectively a currency - so, use repricing (inflation) to mop up the excess.

In that vein, some airlines are raising the number of miles required for various classes of flights, but I bet that irks the loyal customers the airlines are trying to retain - and it focuses the annoyance on the customers that have the most miles, the most loyal of all. Instead, they need a flexible re-pricing mechanism to adjust prices without the obvious intervention of airline pricing departments.

Auctions

Say eBay set up an AirlineTicket category, where the bidding is in airline miles, rather than in dollars. The airlines pay eBay to run the trading mart, showcasing it as a customer convenience particularly for those high-milage customers (the ones with the most miles to spend). Start with bidding against specific flights or upgrade coupons, with a high Buy It Now levels (higher than current per-seat settings). Open up seat availability on a schedule ("3 seats/day" etc) so there are chances for late arrivals to drive up the price for late-purchase seats. Let the customers float the prices up and mop up the currency.

Next, open the auction to flight profiles, so you're bidding on a flight at a between two endpoint groups, over some date range. PriceLine meets eBay.

This calls for some kind of currency-conversion function between airline miles and other currencies (such as dollars), but we know that can be done - loyalty credit cards already grant airline mile credits for dollar-based transactions, now just couple the airline ticket purchase with an offsetting airline miles debit

I think it would have the effect of a tempory "inflation" burst, and then airlines could manage prices by adjusting seat availability and rate of miles grants to achieve a mild ongoing inflation in airlines miles, thus ensuring utilization of the currency rather than hoarding.

And occasionally someone will score a seat for like, 1000 miles - and brag about the coup! Bargain pricing possibilities for noncompromised high-quality goods is a real treasure hunting payoff ... I think this could be a fun and popular way to acquire a non-essential ticket.