Back in 2000, typical coach seats on airlines like American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL), United Continental (NASDAQ:UAL), and Southwest Airlines (NYSE:LUV) had 32 inches of pitch (the distance between rows). Some rows on some planes might have had only 31 inches of seat pitch, but that was an absolute minimum.

However, in the years since the Great Recession, legroom has been shrinking steadily. Last week, American Airlines revealed that it plans to push the boundaries even further on its new Boeing 737 MAX planes, which start to arrive this fall.

An American Airlines plane

American Airlines is shrinking passenger legroom once again. Image source: American Airlines.

Economy seats on American's 737 MAX will have a maximum of 30 inches of pitch -- and a handful of unlucky customers will be stuck with just 29 inches of legroom.

Legroom has been shrinking for a while

In the first decade of the new millennium, U.S. airlines faced enormous challenges. The 9/11 attacks and the recession both caused air travel demand to plummet. In between those events, airlines had to cope with a massive spike in oil prices.

One way that airlines responded was by bulking up through a wave of mergers. Today, American, Delta, United, and Southwest account for more than 80% of U.S. airline capacity. Airlines also reacted by cutting costs, most notably by squeezing more seats onto each plane.

In recent years, airlines have rebounded to earn record profits. However, the urge to reduce costs by cutting legroom hasn't gone away.

Virtually all of the U.S. airlines have reconfigured their planes in the past few years to add more seats. Some still have coach seats with 32 inches of pitch, but 31 inches is the new normal. Furthermore, American, Delta, and United have all experimented with 30 inches of seat pitch on some aircraft types. Unfortunately, the shift toward tighter seating configurations doesn't seem to be over.

American Airlines wants to go further

Just a few years ago, American Airlines offered the most generous legroom in the industry on its 737-800 jets. However, during 2014, it added 10 seats to each of those planes, bringing them in line with what was then the industry standard of 160 seats.

The new 737 MAX 8 model is the same size as the 737-800. However, American Airlines plans to squeeze 172 seats onto the 737 MAX 8. It will gain some room by installing space-saving lavatories. But the main way to squeeze more rows in is to reduce legroom. The economy rows will have a maximum of 30 inches of seat pitch, and three rows will have 29 inches of pitch.

By contrast, Delta has 160 seats on its 737-800s, with 31-32 inches of pitch in coach. United has squeezed 166 seats onto most of its 737-800s, reducing its seat pitch in coach to 30 inches, but some planes still have 154 seats and thus more legroom. Lastly, Southwest has 175 seats on its 737-800s but still has at least 32 inches of pitch for each row because it has no first class section.

A Southwest Airlines plane

Southwest Airlines now offers more legroom than the legacy carriers. Image source: Southwest Airlines.

American Airlines claims that passengers won't notice the loss of legroom because of the slim design of its economy seats. However, while that may be true for the rows with 30 inches of pitch, it's more doubtful for the rows that offer just 29 inches of seat pitch. American hasn't committed to identifying those rows in any special way before customers book their seats.

In an even more ominous sign for airline passengers, American Airlines has said that it may retrofit its roughly 300 737-800s with this cramped 172-seat configuration. United Airlines is considering similar changes to increase seating density.

This isn't the right way to cut costs

American Airlines certainly needs to reduce its costs in order to match the stronger profit margins of peers like Delta Air Lines and Southwest Airlines. It's no surprise that United is considering a similar move, as it has also routinely lagged the rest of the industry in terms of margin performance.

However, these carriers should be reducing their costs through productivity improvements that don't impact customers (or even improve the passenger experience). Cutting legroom will drive some customers toward the few carriers that offer more legroom and better service, while convincing others that there's no reason to pay even $1 extra to fly American or United rather than the cheapest budget carrier.

American Airlines executives may figure that most business travelers will upgrade to seats with more legroom anyway, while the masses are just looking for the cheapest ticket. Perhaps they are right. But if not, then American risks severely damaging its brand with this move to pack even more passengers onto its planes.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.