Not that it's never been completely off the air. The last time that I checked (https://en.wikipedia.org/wiki/Happy_Days#Broadcast_and_syndication), Me TV airs it every weekday in the late afternoon/early evening (depending on your time zone). Happy Days first went into off-network syndication (https://www.nytimes.com/1979/08/28/archives/tv-reruns-are-bought-for-record-prices-record-prices-involved.html) in 1979 (https://www.hometheaterforum.com/community/threads/happy-days-again-1979-1984.370251/). The syndicated reruns actually aired under the title (https://tvtropes.org/pmwiki/pmwiki.php/Main/SyndicationTitle) Happy Days Again (https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.lulu-berlu.com%2Fhappy-days-paramount-pictures-1979-promotional-information-sheet-happy-days-again-a59732-en.html&psig=AOvVaw30l59B928oFqyJXwvHCHzP&ust=1633512262586000&source=images&cd=vfe&ved=0CAwQjhxqFwoTCPjuhsT5svMCFQAAAAAdAAAAABAD) to avoid confusion since first-run episodes were still being produced for ABC.

Somebody on Ken Levine's blog has suggested (http://kenlevine.blogspot.com/2020/05/entrance-applause.html?showComment=1590631328831#c2384911286719787454) that the out-of-control applause whenever a main character (such as the Fonz) would make their first entrance was actually, a detriment to the series in the long run. At the time the first-run episodes were being broadcast, the audience reactions may have been justifiable since it could be looked at as hype in order to get the people watching at home as equally excited.

But after the mania surrounding Fonzie was over, people while watching Happy Days in reruns were left with purely judging the show on its comedy. And by the fourth season, Happy Days was more or less, coasting on lazy writing. This was based on the realization that they didn't have to be all that funny to make the audiences of the moment scream with delight.

i have heard those things too

I don't think it underperformed; it was seen in syndication for decades.

I will never watch seasons 1 and 2 in syndication again

I didn't watch the show much, but didn't the audience also react whenever Joanie and Chachi would smooch?

Here's some additional "food for thought" (http://zvbxrpl.blogspot.com/2006/12/in-defence-of-very-special-episodes.html?showComment=1165765320000#c5364770604548506989):
Sitcoms doing drama did have to walk a very fine line between entertaining the audience in a different way and hectoring them, in excessive preaching in place of any humor. In reference to M*A*S*H, what happened in the late 1970s was similar, but at counterpoint, to the late-70s problems metioned in the threads below that afflicted "Happy Days".

In that, the desire to elevate Fonzie above everything else, combined with the audience reaction that made The Beatles' appearance on "The Ed Sullivan Show" sound like a state funeral, made the final seasons' episodes unwatchable in syndication, as the show strayed further and further from reality.

With "M*A*S*H", all the adulation of its ability to mix drama and comedy grew from the moment of Henry Blake's death over the next several seasons so that by at the latest Season 8, the cast, writers and producers had become so full of themselves with pretentiousness, they came to believe imparting a dramatic message to the audience was more important than actually entertaining them. And as a result, just like "Happy Days", the final seasons of "M*A*S*H" are unwatchable, but remain on air because they're part of the syndication package with the earlier episodes (it would be an interesting experiment to see if a station's cumulative ratings for "M*A*S*H" went up if they immediately went back to Season 1 as soon as Radar leaves for home, as opposed to airing the final 90 or so episodes. I know TV Land did a semi-mock poll once asking viewers if they preferred the "Happy Days" episodes before or after Chachi's arrival. No points for guessing which one won).