Air travel is a commodity which means razer thin margins and fight for shaving off every last cent. In this type of markets, usually way to succeed is provide upscale product but with only slightly higher margins. In other words, instead of fighting for margins at the bottom, you fight bit above. In airlines case this strategy would translate in to providing all business class plane but with only 15% extra prices, for example. Lot of customers who are extremely unhappy about nickling and diming would flock to this model.
The problem is that first class takes up much more than 15% more space per person than coach. You'll notice there are three chairs per side per row in a standard 787 coach, but only 2 first class. That's 50% more right there, plus there's more leg room so it's worse.
Their margins are already thin even packing it as they do, so at only the equivalent of 2/3 current capacity that would be a recipe for failure. They'd have to charge probably twice as much.
I agree with this, whenever I think about the airline industry (and I do often as I travel 100% of my time for work) - I believe the only way we can really re-invent it, is to change the plane, not the airlines.
