They'd have to increase compensation, but John Q. Public thinks he deserves to fly from LAX to BOS for $49 and his pals fly free.
Since investigating flying as a career, I've had to alter my perception of airfares.
John Q. Public thinks this way because he has been allowed to. Brand loyalty is very difficult to establish when the flight from DFW to ATL is exactly the same be it Delta, AA, United or anyone else. There isn't much differentiation, so the airlines don't exactly create brand loyalty. FF programs DO create some loyalty, but it's only among business travelers, who are the only ones who can use the programs.
Couple this with John Q. Public being
accustomed to dirt-cheap fares. SWA has been slightly increasing fares over the last few years and it hasn't hurt them, mostly because they've created a good value proposition in the mind of the pax and they deliver what they promise. I've found that other pax who hate SWA have only flown them once before. Fly enough, and you appreciate what they do.
Right now, I'm allowed to buy a ticket up to $350 without having to get it approved, and usually I can make a case for up to $500 - my company generally will make me re-schedule something if the ticket is over that because that's what we factor into the cost of the revenue I generate as a sales rep. If we blow out travel budgets, we get in major trouble.
But I swear to you, with every fiber of my being, that if the 'low' fares were $500 instead of $149, we biz travellers would still pay it...
eventually. We'd be more selective about how we plan travel to get better fares, yes, but we'd get
used to it, to the point where a $500 fare looked good, and it was a $1200 fare that was out of the question.
We've been allowed to expect low fares. A gradual increase across the board is a good idea, IMHO. Reminds me of the parable about boiling frogs.