Frankly, I think you're way off base here. I've been working on Wall Street for the past six years, and all my business travel has been full fare, and none of my personal travel has been. I don't see how you can claim "odds are I'm paying full fare when I take my family on our vacation anyway." That makes no sense.

And, yes, while some people don't care what airline they fly as long as the flight time is convenient, etc., there are plenty of mileage whores out there who do. I know I've certainly diverted as much of my full fare business as possible to CO over the past few years. Why? So I can retain my elite status. When do I most benefit from my elite status? Probably when flying on full Y fares, when I can confirm an upgrade at ticketing (I usually use miles to upgrade for personal trips -- don't want to gamble with the EUA).

When one is flying, say, NYC to ORD/SFO/LAX/LON or other big business centers, there's no shortage of convenient flight times on multiple carriers. Choice comes down to 1) corporate travel policy and 2) personal preference. Loyalty programs have a lot to do with #2.

So, maybe CO is alienating the leisure flyers. But unless I'm in a small minority, they have every reason to focus their efforts on their most profitable travelers.
As for the leisure travelers, I wonder if you did a survey asking them to rank the factors they consider when choosing an airline, where would Loyalty Program fall? Probably below price and convenience, but just my guess.