For me, I can fly just about anywhere on any airline -- at any price (well, not "any" but you get the idea

) Unless they don't fly there (i.e. I don't do LAX-MSP-DEN) or there is a really out of line price, I fly NW. They reward me for my loyalty by giving me a shot a bigger seat and more room. The more I fly in a year, the better my shot at that seat.
Take that away and I see no reason for loyalty to the airline. If all airlines got rid of it, I would fly strictly based on price and schedule.
Do you really think there is a market for a paid domestic first class? First off they would have to re-do the planes to have much smaller FC cabins. And that means one FA for maybe 8 pax which means basically adding another FA or reducing service in Y. I don't think it works except maybe on a couple routes.
And over the years I have seen many FC only airlines try and fly LA-NY -- how many are operating today?