It's a complete mystery to me how KC comes to the conclusion that upgrades or miles are a "gift".
Not just KC. Try the United States government.
It was only just a few years back that the government, specifically personnel within DOD, were able to use the tickets generated by their FF miles or credits. Before the change in rules, you had to forfeit your miles or credits or use them exclusively when traveling on government business.
The view, as espoused by military attorneys during the ever-popular annual ethics training, was that the miles or credits generated by the official travel done by a particular individual on orders was property of the government, and individuals were expressly prohibited from using the fruits of their travel.
The truth is, they (the gubmint) probably still thinks the miles or credits should accrue to them, but the burden of tracking and enforcing and managing the miles and credits is too onerous a problem....much as it pains us to do it, let the service member keep and use the miles.
I will say that what the government does defeats the purpose of various FF programs. FF programs were instituted by airlines to try and keep a traveler on a particular carrier. Government personnel travel on whoever the contract carrier is for a particular route (unless the contract fare is higher than standard Y, in which case the government personnel can opt to travel at standard Y on a non contract carrier and yes there are bid/contract fares higher than full-Y.....not sure why.) So its not a matter of loyalty to an airline, its a matter of whoever the government is telling its personnel to fly.
In my case, I collect AAdvantage, Onepass, and Rapid Rewards dependent upon who the government has decreed that I fly on any particular trip. Out of sheer principle I refuse to have anything to do with SkyMiles.
Bottom line.......an argument can be made that the miles or credits belong to whoever purchased the ticket, rather than who occupied the seat. Rewarding the seat occupant for their travel can certainly be construed as a gift.
You know, it's really strange and it just occurred to me....but what FF programs are, really, are very similar to truck stops on the edge of Victoria, TX back when I worked in the oil field. They offered a cash discount to folks driving heavy (and diesel-thirsty) oil field trucks and equipment. Their prices were higher, but you'd bring in the truck, charge it on the company fuel credit card.....and after you'd run up a diesel sale of $65 the truck stop would put $5 or $6 in your (the individual who drove it in) pocket. Needless to say, a lot of employees were not looking at fuel prices when they decided where to fill up.
Analagous to the airline industry? Are people really so addicted to miles that they will pay $417 for a plane ticket they could have gotten for $79? You bet they are.