I guess you really are that naive...
If an airline is flying a bunch of MD80s and other airlines are flying newer 737/A320s, you are getting beat because of the operational costs of the airframes, not passengers booking into or away from them.
I think most folks would say a E170/175 is more comfortable to passengers than a CRJ-700/900...so why have the 700/900 continued to sell? Because they are more fuel-efficient and economical to operate than the E-Jets.
Besides, Allegiant doesn't have any problem getting customers and turning a profit flying "undesirable" MD80s...