The incentive is right in the term loyalty points. Tending to stick with one airline, if you travel a lot, has all sorts of status and rewards incentives. Which you can augment with things like branded credit cards, etc.
Not really. I fly a lot. Lounges are entirely superfluous. Business class is overkill when premium economy exists. Boarding early is silly, the plane takes off at the same time.
People just like feeling like they’re special, and they think points are a cheaper way of getting special treatment. In practice they’re not tough.
