But, huge swaths of the public regularly pay much more than the minimum required to have better:
• Cars
• Clothing
• Restaurants
• Theater seats
These are just the first few that come to mind.
Now, is the difference between high- and low-end clothing "pretty big"? I guess it depends on what you mean, but both will fundamentally cover your body.
For airlines, people just want to get from point A to point B, and nothing else really matters at the end of the day. Even on higher end airlines, flying is unlikely to be a truly pleasant experience, unless maybe you pay almost an order of magnitude more for first class or something. People just want to get it over with.
I mean, I think we're saying the same thing here. But whereas I feel you're framing this as a "bug" in how consumers operate, I think they're behaving quite logically. People will pay more for things they actually care about. When they don't care, they choose the cheapest option.
It is just a statement of the obvious. Price tends to trump every other consideration, unless the difference is pretty big. See also airline ticket pricing and the race to the bottom in comfort & features. If there is no differentiator, a lot of people will just get Android phones because they cost less. They'll put up with quite a lot of abuse as long as they save a few bucks. It'd probably end up like gmail.