I just can't find the logic in a smaller rumoured air. When we finally have the technology to go big in screen size while keeping the weight down, the screen size goes down to unacceptable 12 inch. By now we should have 17" notebooks with a 15 inch size frame. No borders.
To me, 17" is "unacceptable", even if it's paper thin. I love the form factor of my MBA 11", and I'm eargerly waiting for the 12" MBA because I believe it will not be any bigger than that.
That goes to show that everyone is different, what is unacceptable for someone is mandatory for someone else. That's why you can find laptops ranging from 10" to 15". Whatever your choice, you will have to sacrifice something. Portability on the bigger ones, screen real estate and performance on the ultra ones. Unfortunately for you, manufacturers choose to go with what the majority of users want (or push the users to want what's cheaper to manufacture - hence the horrendous shiny screens we've been suffering through for years).
The MBA is all about mobility, that's the world we live in now, and it won't get bigger, and it's not a question of technology.
Why isn't there 17" laptops lefts ? I imagine, because - for most people - the trade-in in mobility and portability isn't worth the extra screen. Because most of them stay on a desk, and smaller ones are powerful enough to power external monitors. And external monitors are incredibly cheap, these days. They're the ones that are getting bigger. The advance in technology means smaller screens can offer the same real estate as bigger ones used to, which was the main reason for 17" laptops.
I sold my 15" rMBA to get an iMac for just this reason. It was too big and I was using it as a desktop replacement (which is a damn shame for a retina machine).
Besides, a 17" laptop with the thinness of the air ? That would probably make the whole machine very fragile.