Prior to the Airline Deregulation Act of 1978 the government regulated airlines closely, including routes, services, and prices, treating airlines as a public utility. The way to incentivize customers to choose one airline over another was through excellent service if there was competition on a particular route. But limited options and high prices are not what consumers really want. The new act allowed airlines to compete in many different ways and today's airline operations are the result of company adaptations to consumer preferences.

An average price to rent a 737 is about $21k per hour. Typical seating is 162, so the per-passenger cost is $130. Max seating is 189, so per-passenger cost would be $111. You can spread seats out, but you have to accept that prices will be higher. The plane still has to fly. That's why it's great that we have many airlines with different seating/pricing strategies to choose from. If you want more space, that's great. Just pay for it.

For every inch saved between rows you can add about one more row on a standard plane, further spreading out the cost and lowering everyone's price. You don't just pay for a seat. You pay for the amount of space you want when you choose one airline, flight, or seat class over another.

Michael O'Leary, CEO of Ryanair in Europe (thing of Spirit or Frontier, but more extreme) has considered charging to use the restroom on Ryanair planes in order to reduce usage. This would allow them to remove the 2 bathrooms at the back of the plane and add more seats, reducing everyone's fare by 5%. For the record, he doesn't care about the money from toilet use and said he'd give it to charity, he just wants the extra space. Low prices are Ryanair's business strategy. People would complain, but they would also get the lower prices they want.

We can't both complain about cramped seats and also low prices in the same breath, but that's the economic reality for airlines- balance comfort with price. We could all pay for first or business class if we really wanted comfort that much, but most people choose economy.