Would Japanese-style reversible seats (where passengers can choose to set them as airline or banks of 4) be uneconomic?
They have similar in Sydney NSW
The more modern versions in Japan and Australia are presumably better in terms of safety in the event of something going wrong, though I imagine the staff aren't too keen on people switching them round willy-nilly so they can play cards.
The ones on Sydney's suburban/inter-urban trains are very simple and are explicitly designed for passengers to adjust whenever they wish:
I wouldn't wish to hazard a guess as to how they'd comply with the safety standards in place here.
However, both the current long-distance fleets in NSW (XPT and Xplorer) are fitted with a more sophisticated design where each pair of seats is mounted on a central pivot that is locked and unlocked by a concealed foot pedal. The normal configuration is all-airline, with the cleaners or other staff turning all the seats to face the new direction of travel whenever the train is reversed (which never happens en-route). Groups of passengers can request that some seats be turned to create a facing set, and a small number of detachable tables are carried for this purpose:
First class seats set up in a group of four, showing the portable table that is used instead of the built-in tray table on the back of the seats.
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The major downside with this system as it relates to groups is that the seats are fixed in the airline pitch, which means that the passengers in the rotated seats have to share the legroom of the passengers facing the "normal" direction, as can be seen here without the table installed:
First Class seats showing the full recline of the seat. Compared to the Economy Class seat the recline is about the only difference between the two classes seating.
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I suspect that it's a similar arrangement used in Japan, India, and a few other places (some parts of the US come to mind), and I don't think they've resolved the pitch issue either.