Not everyone works in areas that they can take time off during the school holidays, even if regardless of industry sector they work for a small employer then not everyone can take their leave at the same time it would leave the employer short staffed.
I was a military brat myself, have lived in a tourist area where most families couldn't take time off in school holidays and now live in an area where lots of families have someone working in the offshore oil industry which restricts when people are on leave.
And before anyone says "they chose those jobs" it's not that simple in a time when there's precious few jobs of ANY kind about.
Personal experience too - I found they did sod all educationally in the last week to 10 days of each half term - I'd LOVE to know how many teaching hours THAT wasted. Dd used to be bored rigid. Why is this? When I was at school it was the afternoon of the last day of a FULL term you'd get to watch a film or play games you'd brought in but... A week/10 days that's ridiculous.
It should be at the discretion of the head who KNOWS the children/family concerned. If it's a child/ren that are repeatedly late, often off then I understand them being told no, if it's a family where they're usually punctual, committed, rarely have time off then there's no reason why not.
The head will also know which children will be able to catch up easily and those that would struggle.
Without wishing to go all "conspiracy theory" I do wonder if it's simply another arbitrary target that gives govt a stick to beat schools with.
As for supply and demand, holiday companies and airlines COULD change their policies if they chose. They just wanna keep raking in money from a pretty much captive market.