Actually, mostly by charging pax like WHBM. A goodly chunk of the airline's profit is made from the last handful of seats sold on each aircraft.

You can see the same thing if you look at Independence Air's rationale for leaving SJC (widely published). They couldn't get many last-minute full-fare paying pax to buy the last few seats on those flights, so the route didn't make much money. However, at SFO, they can - so SJC got the chop.

In contrast, the free seats tend to be on flights that would never have been full anyway, or to be seats which would otherwise have been sold for very little money anyway - so the actual cost of the promotion is relatively small.