Problem is the majority of people are looking for the lowest cost transportation between two points. Customers, in general, don't see sufficient differentiation between products - seats are now a commodity with oversupply.

I've been told at times to travel an extra hour on the ground - a $100+ cab ride each way - to save $80 on a ticket from NYC to SFO. [I argued successfully against that... but you get the point.]

So -to make an airline profitable requires one of the following:

a) lower cost
b) marketing/product differentiation good enough to get people to pay a premium*
c) reduction in supply.

* seems like some airlines have managed to convince people that they're less expensive even if they're not.