Airlines don't care one way or another. It's customers that want to cram as many seats as possible as that makes their cost cheaper. If there was a market for comfortable travel that was reasonably more expensive than what we have today it would exist. I know this because it used to be like this. As soon as "sort by price" became the main way people book travel it killed this option.

People want the cheapest flight possible and airlines are serving what the public has demanded.