I am (genuinely) having a lot of sympathy for people who have been affected by the current situation and the new changes. However, I don/t think it indicates what you say to be honest. As much as I 100% agree with you that it is mistaken to assume that big companies just make the right decisions just because they have made them, I think it would be mistaken to assume that the status extension was intended to compensate those less able to fly their usual route. In fact, I think that's an untenable assumption. I think status extensions have a bit of a headline value - airlines want to be shown to do something, but they also have a cost and of course always open accusations of unfairness from those not benefiting. There is absolutely no incompatibility between BA knowing some passengers were very badly affected by their suspension of the TLV route for months and making a conscious decision to have them out of scope for compensation.

For one thing, the simplest qualifying conditions are typically the most straightforward - account residence is an easy yes/no, anything else becomes increasingly arbitrary - what are you proposing exactly as an exemption qualifier - a majority of flights ex-TLV? Or 25%? Or something else? How about people ex-TLVs with stopovers in London which effectively means they are using ex-TLV as pricing strategy but could easily rebook half of those as ex-London? How about people with 50% of their flights to TLV from elsewhere? The more you complexify, the messier it gets.

Second, you interpret the exemption as based on people being affected, but I'd argue it is far more likely that BA are justifying it on the basis of impossibility. If you are solely based in TLV and BA stop flying to TLV, then it has been literally "impossible" to fly BA for you - be it on their own metal or codeshare. If you are wholly or partly based elsewhere, BA will consider that you could have still flown BA even if it is not on the routes you want. And if your BAEC account is based elsewhere than Israel, then it logically means that you are at least partly based in a second location and thus are not faced with an impossibility to travel. In all likelihood, this is good enough from BA's point of view, otherwise they would start needing to consider a whole other range of destination specific exemptions where for instance they reduce frequencies, stop flying their own metal or nonstop to a given airport or country etc.

On the broader question, again, I think that you are answering a question which is not the one BA have asked themselves. Whilst BA may or may not make the right decisions (only time will tell frankly), they are, at any rate, not completely dumb or dumb. They know perfectly well that people prefer long haul planes to short haul ones , they know perfectly well that people flying F to a destination prefer to have F all the way rather than connect to/from a CE seat, they know anyone will understandably moan if you change their earnings from 140 to 80 and so on. The question, however, is to understand whether TLV still justified an exception compared to other similar routes and that is a lot harder to know for sure for any of us.

I daresay that not a single ones of the arguments used by posters in this and related thread to explain that BA will lose TLV customers with the changes would not equally apply to LCA, CAI or a number of others. Stretching a bit, most are the same as what was also discussed when BA decided to downgrade DME or when people argued BA should upgrade IST if not ATH. I am not saying that long haul planes or long haul earnings have no attractivity value to premium customers, and I'm not saying the TLV route is short on premium customers, but one would be foolish to assume that LCA or IST are short of premium customer customers either as anyone frequently using these routes will know, and the cold question of how much of your profitability on a given route depends on that specific service aspect given the additional costs involved and optimal traffic levels it requires honestly requires a lot more detailed and specific knowledge and calculation that what any of us in this forum can have access to for now, including people who were on those TLV-LHR planes every single week.

I just think that any attempt to decry the BA decision as "obviously" absurd or self-defeating is bound to fail because the reality is that there are no hard arguments that would back such a narrative of "obviousness". With respect, whilst every single one of us will prefer to spend 5 hours in a flat bed than 5 hour in a converted economy cabin, the idea that a 2000 miles flight is not one people can arrive sufficiently fresh from if they have sat in a fairly basic reclining seat does not hold water in the context of the norms of the aviation industry. That sort of distance is pretty universally deemed short and medium haul by default be it in the European, near Eastern, North American, or Asian markets, meaning that by default, airlines will fly the same sort of planes on most flights of that sort of length as they would on a 2 hour flight, be it on most MIA-LAX on AA, TLV-AMS on LY, IST-LIS on TK, SYD-DWN on QF, etc. The question is thus whether specific routes within that range do or do not justify a departure from that norm (JFK-LAX as transcon, SYD-PER, or indeed, LHR-TLV thus far). Conversely, the whole notion that every premium pax will just desert BA is unrealistic even if some will leave, and some may even decide that if the change makes BA more competitive on a flight to CPT or EZE or YVR, they'd rather get the less good service on the shorter flight to travel CW for less.

So all in all, you can only rely on a fine-grained and partly uncertain calculation of marginal gains and marginal costs as well as numbers and prospects. It's very possible that, for example, BA may have deemed that keeping the long haul equipment to TLV would have still been worth it if J yield increased by 20% but that this would have priced them out of the market, or even that the long haul equipment would still be profitable at current prices but less so than by using such equipment on another route in which the margins will be higher.