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This is why I laugh when it's suggested that airlines could provide bottled water on board. They're in such deep financial water that they'll charge for anything.
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I think I'd pay the dollar for a bottle of water. I think most people would. If they can buy it for $5/case, sell the 32 bottles for $32, that's a nice profit.
And pretty much every flight includes beverage service in flight already, so I don't really find it to be that unrealistic.