You're missing much of the issue here. CO has sold ELR seats, including exit rows, from day one of the ELR program. We never had a big problem with it because those seats were held for Elites until OLCI, then available to anyone who wanted to buy them. The only people affected by this process were SDC/re-routes or very last minute buyers.

What CO is saying now is loyalty revenue is worth less than a few extra dollars from a low-value, unloyal Kettle who books a discount ticket way out and adds an extra $40-80 to their ticket in order to grab a seat with more legroom. Come on, even UA holds exit row seats for Elites! We're talking about an average of 4 really premium and 4 somewhat premium (non-reclining exit) seats across the entire domestic fleet!

So along comes Mr/Mrs Platinum (or worse - a $30K+ Plat) who flies on business and is booking a transcon inside of a week and grabs a fairly expensive K, V, or U fare, which is $100-300 more than the Kettle who spent $200 (+$60) for their ticket - now the Plat is left with a no legroom seat, while the Kettle is hootin' it up in the exit row. How is this good business sense??

That Plat has this experience a few times and then decides to middle-finger CO and starts booking away on a competitor, eventually moving all of their revenue over - and evangelizes their experience and decision to others, who look at doing the same.

How does CO come out a winner here?

It's a stupid business decision from my point of view. I can't think of anything to justify it....except to say to CO's Elite customers - "hey, you can still book ELR seats for free - but if you can find any! Hahaha".