I have to agree with the Preditory Pricing sentiment. Haven't Lufthansa just had to raise some of it's fares in its spat with Ryanair becasue the special fares were below cost, therefore subsidised and preditory?
A free seat has to be at a loss unless you can somehow apportion your FOC's and DOC's over less seats than you have, thereby freeing up capacity that in your books, costs you nothing to operate.
On a simpler note and with all the no-frills operators, how can seats sold at either cost or a loss generate enough profits to pay for new aircraft?
Its a mystery