To me, without any discernible benefits from a frequent flyer scheme, BA has no real assets other than the name.
It's British, the flag carrier and has a presence in the country of London.
Easyjet and Ryanair, whilst popular, do have some stigma attached to their name which is possibly a reason a lot of people stay "loyal" to BA - they have the reputation of giving a middle finger to their customers, screwing them over whenever etc. and as with a lot of things in life, people see nothing but that and their opinions are firmly made up.
Most people out there just want, what practicably amounts to a cheap taxi service, from A to B. They know nothing about Avios, tier points, TP runs, lounge access, fast track, Tesco CC conversions etc. or probably care about it.
The majority of BA customers probably fit into this demographic so BA have looked at this and thought "why bother spending time and effort on people who may or may not fly with us".
I do, in the long run, see BA as putting too many eggs into one basket. There are only so many people out there with money and all it takes it another financial crisis or something, a bank goes bankrupt and a large source of income vanishes overnight.
Future flyers are less likely to want to be loyal if there's nothing to be loyal for.
I can see Galleries Club in T5 vanishing within a year or so. Less people able to access it and what's the point when anyone who can get into a lounge are the ones spending ££££ and will be in the Flounge at the very least? Saves money, staff etc. in the long run - probably a good place to stick a paid lounge.