Originally Posted by SEA_Tigger

Except if they lower the fares to $150, then all the serial upgraders in First will be paying $150, instead of $200.

So say 125 (100% of a hypothetical mixed First and Economy plane) seats go at $150. US makes $18,750. They're better off keeping fares are $200 and selling just 100 seats, since at least the serial upgraders will be providing $1250 more in revenue (25 x $50) which offsets the empty Economy seats that can't be sold because they're too expensive at $200, but not too expensive at 150.

The volume doesn't work until you can sell enough extra seats at the lower price so that the total revenue collected offsets the lower price. That is why UA just didn't cap fares at $299 each way and fly mainline A320s with First Class when they launched TED. They knew that if they lowered the price, the serial upgraders would take advantage of that, and even if yields in back rose to 100%, there were not enough seats to sell to make the flight as profitable as if they kept the old fare structure. But by adding the extra 18 seats, they had one extra row to sell which puts them over the top, even if it's by an "insignificant" margin. It's still more money the UA was making and when multiplied by the number of flights a day, can add up to not-so-insignificant revenue.

Whether the revenue gained beats the revenue lost by losing the serial upgrader's revenue is yet to be seen...