Unfortunately the economics of flying are such that six more seats can make or break the profitability of the plane. With the lowest possible fare becoming ever easier to find thanks to the internet, customers are now gained or lost for as little as a dollar.
I honestly find this EXTREMELY hard to believe, considering the NUMEROUS amounts of "non-revs" (used to be one) that fly. If profit margins were THAT tight, "non-revs" would not exist...
I think you're right. Customers forget how uncomfortable they were on their last flight and just choose the cheapest fare. The result is we all suffer merely because we won't spend another few bucks per ticket.
I think the solution might come from a back door somewhere. Like Southwest has quick turns because they don't reserve seats, which induces people to sit down ASAP.
The problem is that ever airline must compete, so it's a race to the bottom of comfort and service.
I don't have an idea to fix it. There needs to be something between first class with quadruple the fares and fine china, and down in steerage.