I would completely disagree that they've lost touch. They know exactly what's going on. Airline executives do not care about their customers' comfort. They care about how much revenue they generate, and nothing more. Moreover, frequent flyers are not valued customers. They are a PITA. This is self-evident from the way they are treated these days. They make up such a small subset of the whole customer base that they really don't have a significant impact on the total revenue. Again, the degradation of the FF programs over the last 5-10 years is ample evidence of how the airlines regard supposedly elite customers from whom they supposedly seek loyalty.

The reality is that airline executives would dearly love to get rid of the frequent flyer programs, and dearly wish they had never started in the first place. They were conceived with the best of intentions, but the current state of affairs shows that they created a monster. They are horrendously expensive, a huge administrative burden, a major liability on the balance sheet, and they aren't accomplishing the objective, which is to increase revenue, not to build customer loyalty. The problem is that now that all airlines are doing it in one form or another, none of them have the ....s to be the first one to get rid of it. They don't trust the other guys to follow suit.