at the center where I teach, the number of class participants are tracked very carefully. There is a rule called 5 x 5 which means that a class will be cancelled if 5 participants or less are in the class during a 5 week period. This may mean that another format is offered or that the class is taken off the schedule entirely.
If an instructor shows up late for class repeatedly, this is grounds for a dismissal. It can happen once with a valid reason but after the second time, I would give a reprimand with a notice of probation. An instructor with poor time management has no place in the fitness industry.