The problem with this is that the demand is not correlated with distance. If you had uniform demand on all routes, this makes perfect sense. If they uniformly applied this rule with a single per mile metric, in heavy demand routes, they would leave money on the table and in low-demand longer routes, they would fly empty because the fare would be prohibitive even if their cost structure would allow for lower fares.

It might make sense if you were cherry-picking high-demand routes onlly so you could assume uniform demand. If you look at some of the LCC pricing, it approximates this to a certain extent but not linearly.

What they have done with the Airpass is to fix the price at the upper end as if you were flying a high demand route all the time. Hence, it is too expensive for many routes.