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Airlines are actually very low margin business. Thus, all these pricing tactics merely offset the drastically cheaper tickets. It makes sense, their margins are so low that they have to nickel and dime everything to make a small profit in good years and avoid going under next recession.

If you fit more people onto a flight, you can make more money, while the journey is less comfortable for the passengers.

and if all those people paid the same amount then there would be the same end result, but the situation would have nothing to do with the conversation, so i'm afraid that explains nothing.

Business and 1st class subsidizes basically all of Economy class.