Deliberate choice; system limits the "cheapest" class. No changes to this planned.
It would make sense if there was a way for system to automatically upgrade Y passengers to C.
For example if the route has 120 Y pax demand, the aircraft has 120 seats, of which 110 are Y, 10 are C, the aircraft will always fly 10 empty seats, and depending on payload limits, will have 100% LF on remaining Y seats and leave pax behind.
Adding a flag here and there to address small parts of this issue may not be the best idea though. I think the system should do most of the work automatically, without player intervention, without having to set, re-evaluate, reset these flags on 1000s of flights throughout the game is probably not the best idea.