This is an industry trend worth watching. If it catches on and more airlines follow suit, then this means both degrading of ff benefits and premium product exclusivity.
Indeed.
I think its a bad move in general. I think its better A) to reward loyalty by having a relatively reliable system for upgrading using points, and B) to offer a restricted C product for a price that leisure passengers are willing to pay. (I'd pay 3.5k for a C ticket North America to TLV, I won't pay 8k, but I'd be willing to book 6 months in advance and accept a significant cxl/change penalty).