There are a whole lot of other assumptions being made to but they key thing to remember is that that yes they are related and no they are not. Although I am not in the airline industry (depsite the problems, I wish I was) I am involved in finance/accounting area. It is true a full plane at the lowest fare likely will not make money as it is true that plane that is not completely full, even below 50%, may make money - but in reality and even with WS you will not see these scenarios.

This is more of an art than a science (a tired cliche), the trick is being able to target the various customers with the right fare, hence the fare structure, some companies go overboard and try to have to many while others have a smuch simpler structure. Getting the right balance is not easy. AC and others do know what their fixed costs are and their variable ones, so they do know what it will cost to have a flight and the corralery what it will cost if they decide to cancel. Add in the other variables of connections, alliances, weather, 100s of routes and combinations and you have a very intersting (to some) and very complex problem to solve.

One thing that I have never understood, perhaps it is because the system does not support, is even when a flight is full enough with enough revenue to cover its costs why do last minute tickets cost the most. If you had a flight at 80% the day before it leaves, that was already in the black why not sell the remaining seats at the best price you can get, as the incremental cost of these is minimal. I suppose they do this to a certain extent with the Wednesday web specials, but it would be nice to see it more often.