That argument might have worked in back in the day when the iPhone was only available on AT&T but not in a world where the iPhone is available to more people than it ever has been before.
The iPhone is perhaps the single most successful product ever, with over 1 billion sold: http://www.asymco.com/2016/07/28/most-popular-product-of-all...
The total marketshare of Android is around 2 billion, but that's the total of Samsung, Motorola, HTC, LG, etc. None of them have individually sold a billion Android phones themselves.
If they enabled more progressive webapp features, we'd start to see a lot more cross platform webapps. That would not be in Apple's interest.
Do you think Apple cares more about selling a $700 iPhone or a 99¢ app? They have over a million native apps for iOS; what keeps that ecosystem strong is how Apple is able to innovate each year on new features for the iPhone, iPad and iOS, not by restricting what web apps can do.
The most compelling features are things web apps aren't very good at anyway. I seriously doubt Tim Cook is losing sleep worrying about Service Workers and the like.
People said the same thing about WebRTC and how it would compete with FaceTime. And now we have WebRTC in the new versions of macOS and iOS, so it's time to create reasons why other web features aren't there.
Web apps have made a lot of progress but for the average user in a developed country, the user experience pales in comparison to native apps.