Remember that airlines almost always opt for the more cramped and cheaper variants of interiors, asking "ok but how do we fit even more cattle in here?"
The thing is, this is far from universal. People don't buy a substantially worse smartphone or car to save $5. But they'll accept a substantially worse product to save $5 on airline tickets.
Which two airlines have substantially different products for a $5 difference?
If you didn't mean literally $5 perhaps you can give us some real examples of cost differences?
Personally I find so little difference between airlines in economy these days. And Premium Economy is nowhere close to a '$5' difference long haul these days
They don't, because competition erases those differences. It's a very competitive market. If people were willing to pay a little extra for a few more inches of seat pitch in economy, you'd have an airline that offered a few more inches of seat pitch in economy with slightly higher fares.