I take your point about airlines needing to remain viable, and I would that loyalty programmes can generate income with remarkably little outlay. Please note that what bothered me most is AFs refusal to credit me with the segment. This means that it is theoretically possible to take AF flights every week for a year and not achieve frequent flier status.
At the first level of FF status the rewards given are essentially cost free and mostly involve getting to the front of queues-something I am sure you will understand the value of. Even the occasional upgrade (I have been a FF with Sky Team for 3 years and have only been upgraded 3 times) is no real extra cost as the seat would otherwise have been empty and now you have filled it with a very happy and increasingly loyal traveler.
It is arguable that since business and premium passengers get these benefits with their ticket anyway, they are actually less likely to find loyalty cards an incentive.