A FIFO queue is essentially like an auction where you use your wait time in order to bid for service -- the highest bidder (longest waiter) wins. LIFO service as proposed here is equivalent to the lowest bidder winning instead, meaning everyone will try to bid zero (or as low as they can).

This changes if you have some uncertainty in the cutoff time -- in the flight example, attendants would close off the gate at some randomly determined time, and latecomers would be able to get great seats -- but they'd also have an excellent chance of missing the flight entirely!

In this case, the thing you're bidding with is how much you're willing to risk missing the flight. If you know that the flight will close at a time uniformly distributed between 10:00 and 10:30 for example, those who arrive at 10:29 are willing to accept a 29/30 risk of missing the flight in exchange for being virtually guaranteed their choice of seats.