This is an interesting thread. I think a better analogy than cars is hotels, also in the travel business. Hotel pricing is far different than airlines from what I see. But the things that hotels do is segment the market. You get to chose what you want and pay for it and the market is big enough for multiple cost levels to all exist. The difference is that more or less, you know what you are getting when you pay for a cheap or expensive hotel, and you typically get it. Also, the difference between the lower end and higher end places are not as great as with airline tickets. Im in Tokyo now where hotel prices can be pretty extreme. You can get a decent room for $100-150 per night. Im at the Intercontinental, about $50-100 more per night. Double that again and you are at the Grand Hyatt or one of the 5 stars. In most cities the price range is substantially less.
But that is a lower difference by far than the price of airline tickets usually vary between the low end and the high end depending on carrier. Even if you only compart coach, you can often see 7 fold or higher price differences. Even in Tokyo that is way outside what you see for hotel variation.
Moreover, as the (admittedly unscientific) poll above indicates, you cant see the difference between US and Southwest in product. That is something that doesnt seem to be sinking in. The difference between a $100 a night hotel and a Grand Hyatt hits you like a 2x4. You may decide it isnt worth it, but no one will confuse the two. There are room for both because they are clearly different. No one would pay for the Hyatt if they couldnt tell the difference. I bought a room in between, because I wanted better concierge service (due to language differences), 24 hour room service and a few other things. I could get them without the cost or luxury of the Hyatt. In London, since language isnt an issue I would have likely bought lower. Point being that given my budget and needs I can differentiate and chose.
I dont think the main problem with US is that their fares a $1 or $10 more than Southwest. It is that their fares have been at times hundreds or thousands of dollars more than Southwest, and they havent produced a product that shows customers there is value in making that choice. What they are doing now it seems to me, trying to beat Southwest at their own game, is bound for utter and complete failure. They need to redefine the game and show some market segment that they have a product that is valuable to them at a cost that US makes money selling. I cant imagine this management group having the faintest idea in the world how to do that, but I wish them luck.