1) A lot of flight tests can't be done without a large fraction of passengers on the plane.
2) It may make getting to the final end state faster (though maybe not), but it means you don't get any benefits until you make the switch. Doing things incrementally means you start seeing benefits much earlier. Classic throughput/latency tradeoff.
1) One big switch. Can probably be done faster, but has more risk that big problems won't be discovered until late in the game and has user-visible benefits until the switch happens.
2) Incremental changes. Take longer to complete, but allow for better mid-course correction and can show user-visible benefits much earlier in the process.
Which of those will lose more customers? It really depends on the market reality and at how successfully the incremental changes can be made.