Completely backwards. A server that is being paid for but not utilized is the best-case scenario for a hosting provider – revenue the same, lower costs (electrical/cooling/etc).

I'm not sure why you compare this to airplanes. Airplanes fuel consumption is very expensive if the plane is empty relative to profit. They need to put bums in seats for the flight to be viable commercially.

On the other hand, a flat out rack takes more power than an idle one. So this isn't the same thing at all.

You seem oddly emotional about this. Also, you're wrong.

Hosting companies count on a certain <100% average CPU usage, and this factors in to their business model in the shared CPU plans. That's literally why those plans exist, because they are getting more users on a machine by counting on less than 100% usage. The users get a lower price and the risk of getting throttled in certain situations. Nowhere in their product description do they promise you can use 100% all the time. If you want that, you go to their dedicated plans.

Don't get so emotional, but if you do, at least make sure you aren't wrong first.

I think others have said it well enough, but you're mixing the VPS business model up with cloud. It's in the interests of cloud providers to have you utilising resources because that's how you're billed. VPS and dedicated servers just give you a bill for potential utilisation, regardless of how much or little you choose to actually use (excluding bandwidth overages).

No competitively priced VPS* is charging a price that works when everyone is fully utilizing their entire quota at 100%...

It's not nefarious: you pay a bit more than the compute you use would cost on a fractional basis, and in exchange the cost of entry is dramatically reduced, spikes in usage get absorbed, etc.

It's a win for everyone involved unless usage patterns shift and suddenly there's never a surplus to go around. At that point prices will quickly climb to roughly what dedicated resources cost.

(*and frankly it's not just VPS, a lot of cloud services rely on everyone not trying to max out their quota at the same time to even function, let alone profit.)

Maximized by flat rate payer, minimized by pay-per-use.

You want to maximize it, the hosting definitely prefers someone who pays and doesn't use, so they can double-book that server.

This is absolutely untrue in both a naive and more nuanced sense. Naively, it's not like an airplane, it's like an airplane rented by the month: the owner of the airplane collects rent whether or not the airplane is flying. More nuanced, many VPS providers don't sell you 100% CPU utilization; they sell you a compute budget. AWS actually enforces this; I don't know about other providers. But if you're exceeding your compute budget and the provider doesn't enforce the budget limit, you can expect the system to break at some point.

On the other hand airlines regularly overbook flights, and residential ISPs don’t have nearly enough bandwidth for every customer to max it out.