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You have the choice between a cheaper (no seat-choosing) flight and a more expensive (seat-choosing) flight. If everyone could choose the price would be somewhere in between and at least some people would be worse off (those who really didn’t care about choosing and would be paying more now and those who would be paying less to choose but now would have less choices).

they may be offsetting a cost elsewhere by doing this. If they wanted to make the same money but allow people to choose their seats they could raise ticket prices for everybody (which wouldn't be fair on those who really don't care about their seat allocation).

Yeah I get what they're doing (and I'm sure other people do too); I'm just saying I see why people feel it's a rip-off nonetheless.

No but it's a possible source of additional revenue.

The cheapest price tickets are often subsidized by the extra charges that some people are willing to pay. I don't see this as a scam.