Here's the thing. Allow me to speak on behalf of...I don't know...99% of the traveling public. @:-)

I want cheap fares.

And on any mature form of transport - car, bus, plane, train, boat, etc. - I want those costs/fares to decrease in real terms over time as technology improves.

Of course, there are parameters:
- I want it done safely, so I'm willing to pay taxes for the infrastructure, standards, and oversight related to roads, rails, airports, ferry terminals, etc.
- I want it done reliably, so I want the labor market for flight attendants, pilots, mechanics, etc. to function efficiently so that the planes and airports are staffed correctly.
- I want the basic services provided by the airline to work properly. Website, kiosks, baggage service, etc.
- I'm willing to accept the 31" coach seat as the basic product for these economic purposes, but I'm also one who may buy up to something better if it's on offer.

The reality is that the airlines go a lot farther beyond these basics - the most obvious example being FFP's that can be extremely rewarding (starting with seats at the pointy end of the plane where this entire discussion does not apply). But at the end of the day, I will always opt for a low fare over something like more crappy airline food.

I notice that some airlines are starting to what I think the OP is suggesting...looking for modest add-ons in between a basic rock-bottom fare and an F fare. Frontier, American, Southwest...maybe others in the U.S. as well? I know United and Delta will also sell extra seat pitch but it appears to be after you book the original itin, based on availability.

Not sure what exactly the complaint is here. Some romantic revision of what flying in the 1970's was like? I'm pretty sure Y seats were still Y seats back then. J/F seats weren't nearly as good as they are now. Airfood still sucked, especially with a healthy side of secondhand smoke. Airlines still lost bags. People always complained about airports.

I do wish that more competitors existed in the market, and maybe they would if more of us were willing to pay more per seat for all sorts of added amenities. (By "more of us" I mean "more of you", of course... ) But if we hold at three viable worldwide alliances plus a healthy stable of regional non-alliance players, I think we're okay. If we dropped to two alliances, then I'd worry a lot more about the two of them horse-trading their way out of markets leaving too little competition.