At this stage that's probably not a problem. Squadron tags are letters and numbers, four characters long, so there are 1,679,616 squadron tags available per platform.
There's maybe a little over 10,000 squadrons on PC (based on leaderboards and random searches, very few are entirely inactive [1]) and the consoles are almost certainly smaller, so <1% of tags have been used. Doesn't look like there's any danger of them running out any time soon.
[1] Back in season 3 I did a random search, picking various two character starts of squadron tags, and seeing how many squadrons showed up with that. Multiplying that sample up to all possible two-character starts gave slightly fewer squadrons than the season 3 exploration leaderboard had on it, so the inactivity percentage over an 8-week season must have been very low indeed. Season 5 had a couple of hundred more active squadrons than Season 3.
How would you determine that a PMF was inactive in a way that would get rid of any at all, but would let a small PMF's supporters go on DW3 and still have something to return to?
Frontier will have to do something in this area, since under current rules about 50% of the space is used up - and rising steadily, but it probably won't be removing the existing ones.