I think you're missing the fact that they were offering better service than the discount airlines but at the same price. It was the only way to compete when most people who travel infrequently purchase strictly on cheapest price. In effect they were offering a better service than people were paying for because they had to.

Now they are finally updating their seating and policy to be in-line with what the discount airlines offer. So they aren't charging more for economy. They're pricing it inline with the level of service you get, something they weren't able to do before.