The reason why it is a problem for the airline industry is that first class tickets are essential to their business model. The problem they have is that there

The reason why it is a problem for the airline industry is that first class tickets are essential to their business model. The problem they have is that there is a large fixed cost to flying the plane from A to B, and a small marginal cost of adding you and your luggage to the plane. All airline tickets cover that marginal cost, but they vary in how much of the fixed cost they cover. The minority of expensive first class tickets carry a very large fraction of the fixed cost. Effectively they subsidize the rest of us. If those people go elsewhere, then you aren't covering the fixed cost of the flight. And now everyone else has to pay a lot more. Which makes the pool of people less.