Low fares, sometimes even below cost, are not in the long-term interest of passengers as a whole. Each customer, however, gains a short-term individual benefit from a cheap ticket. It's just one example of the "Tragedy of the Commons":
At its core, the Tragedy of the Commons demonstrates that, in an situation where the consequences of a course of action are shared among a collective, while the benefits are reaped by an individual or single group within the collective, people will tend to take actions that in the long term are detrimental to the group as a whole. This is a tragedy because, in seeking their own personal gain, the members of the group actually ultimately hurt themselves.
And as USMCFLYR points out, pilots behave this way too.
