I don't think KLM has been removing seats from any of their planes - if they move the "economy comfort" seats a little further apart, they also take the opportunity to move the remaining rows closer together, and add in more seats!

As the home-town carrier, KL naturally enjoys some advantages in the Dutch market - there is a "sticky" factor which will mean that some people automatically consider KLM only, without really considering an alternative carrier; KLM also benefits from their ability to offer a greater range of destinations that can be reached direct and non-stop from AMS than can any other airline operating in the Dutch market. Airlines that offer direct connections can typically get away with charging (considerably) more for the convenience of a direct, non-stop flight.

I presume you are talking about the Dutch market. If you compare KL's prices for itineraries starting over the border in Germany or Belgium, for instance, you might be surprised to see that they are lower.

But this is pretty much standard in the airline industry. Every airline will charge as much as they can for their ticket. In the home market, an airline can usually get away with charging more than those who can only offer a connecting itinerary for the same route.