Southwest has continued to grow over decades of airline bankruptcies, mergers, and pricing shenanigans. If you are a first class or business traveler, that is what the other airlines are focusing on, go with them. If you are just a regular flyer, southwest focuses on your demographic. Things they do that almost no other US carrier does. Two checked bags are free, good to cheapest fares, same price whether you buy a one-way or round trip, cancel your flight anytime and get full credit for it on your next purchase. These are great features I use all the time. I always fly them if they have non-stop flights to where I need to go.

>They've pretty much demonstrated that people make decisions based on the cheapest base fare.

Nope. For example the business sector market doesn't necessarily look for cheapest fares. For that market (which is quite big) there are other considerations, like minimizing layovers, in-flight comfort, lounge access, priority boarding, etc.

Yes, I should have said mainstream personal travel. As someone who travels mostly on business, I'm not the one picking the absolutely cheapest base fee.

On the other hand, those business travelers mostly don't even care about early boarding or baggage fees anyway because they're either expensing them or get them for free because of status.

You are very fortunate. I often flew trans-Atlantic for a former company and their travel secretary was under instructions to find the absolute cheapest fare without consideration. So I occasionally ended-up with weird connections in Manchester or Newark instead of a non-stop from Dublin.

Economy class, of course.

Not entirely - in-flight wifi, extra legroom, lie-flat business class, and seatback-controllable entertainment & food service are innovations that have spread across the industry because carriers found that customers will switch airlines to get access to them. In many cases they're even moneymakers, with customers willing to pay extra for them.

I think that the industry has generally found that price-discrimination is a powerful tool, though. The business traveler flying Sydney<->SFO on the corporate dime will pay the extra several thousand for lie-flat seats; the upper-middle-class family with bored kids will pay for wifi and tablet holders; but keeping those (and baggage, prime seat selection, early check-in, etc.) optional keeps flying accessible to the working-class laborer who needs to fly home for a funeral.

Fully agree. We're really seeing two divergent trends.

Fees for everything for the price-sensitive masses.

And, for business travelers with status (who are at a minimum less price sensitive and typically don't pay most of the base level fees anyway), somewhat better seating as a perk, much better seating for upgrades/upsells, a premium class of airline clubs among the base level (e.g. United's Polaris Clubs), etc.

And, as you say, I don't really have a problem with all this because it makes flying much more affordable for those that find the most bargain economy ticket a big expense. While I might personally enjoy it more, you don't really want a world where lie-flat seats are required on all 5+ hour flights.