Usability not always required

Products...products...products.... so many products... Thousands intersect our lives each day, but this past Friday I was introduced to about 2 dozen new web-based products and actually judged eight of 'em at the Under the Radar conference... So many times, while considering the potential success of these products I considered the usability factors - how easy are they to use? Are they so usable that they offset the pain of switching from existing competitive (and possibly un-usable) products?... So after a long day of pondering products, I board my red-eye flight from San Francisco to NY on a Friday night, with the goal, of course, being to avoid killing a weekend.
What an eye-opener (ironcially).
With the most important factor of an overnight flight being comfort enough to sleep, the overnight flight fails in every respect! This has got to be the worst product ever used by so many people on such a regular basis (second only to the hospital bed pan, of course)
Now, I'm in coach - so those of you in business class might actually have a 23% better experience, but still... overall failure in usability. Being in an exit row helped, but was largely offset by the fact that my new found friends in the exit row also seem to need the space... So, I try to sleep between two men in size XL whose faces are about 18 inches from mine (pleasant) and whose feet are now semi-exposed in the well worn socks, which, no doubt, have seen shorter and less sweaty days and whose head colds now seem to be blooming rather nicely with the onset of spring...

The plane was completely packed... they can't make enough of this product! It's so in-demand, that they could probably tell us to strip naked and sit on our luggage in a fully gutted freight plane and they would still over-sell the flights (not to mention turning me into an image-posting blogger ;)

So - First of all... Why are airlines going bankrupt so regularly? If they can continue to gain customers with a crap product, what's the issue with making money?

Second - what are the lessons for product managers and entrepreneurs looking for hints to find the best products to introduce to the market?
1 - Screw Usability? Just get a product to people who need it ;)
2 - Even if competition is high, a crappy product will sell if demand is higher?... there are seemingly plenty of overnight flights, but the combination of airports and times actually reduces real competition to a very beatable level. Each of these airport pairs actually becomes a sub-market, most of which has a rather low level of competition given the demand.

There's more of course - but i'm tired (did i mention that i got no sleep Friday night?) and this post is way too long...
All I can say is, to beat the competition in a product with this standard, as Richard Branson will tell you, all you have to do is give each passenger a private bed.

Please... doesn't anyone want to enter my SanFran-NY submarket with this improved product?

Don't mind me... I'm just jet-lagged from a sleepless flight back east ;)