All industries, if completely deregulated, behave in this manner. The steel industry, banking and railroads in the late 19th Century produced the "robber barons" (people like Carnegie, Rockefeller and Vanderbilt). They created vast monopolistic monolith corporations, which sought first to gain financial power and then sought to protect their interests by pursuing political power, by any means, fair or foul. This is why regulation of industries were put in place. How quickly we forget the lessons. The seeds sown during deregulation of the financial markets and the airline industry during the Reagan years are now bearing the poison fruit. The solution is not to completely re-regulate, but to regulate intelligently.
My proposals
1. Limit the market share of any airline in a given airport or air market to 25% maximum of the slots, or 20% of the overall passengers. Airlines can be given transitional arrangements to arrange "slot swaps" over 5 years.. eg... AA gives up market share in Dallas to Delta and Delta gives up market share in Atlanta to AA. That is a simplistic example, but illustrates the principle.
2. Drop foreign ownership rules and foreign competition on a bi-lateral agreement basis. Eg, if the EU opens up their market, then the US will be open to European carriers.
3. Regulate abusive practices, such as misleading advertising of fares by creating meaningless "fees" which are mandatory and which are not shown in the headline price.
4. Pass a passenger bill of rights.
5. When an airline goes bankrupt, it should be allowed to fail and other, better managed airlines allowed to fill the market.
The airlines seem to have convinced us all that if they are allowed to fail, it will be disasterous for the economy and for jobs. This is nonsense.. other more nimble, customer responsive airlines would quickly move in and fill the void.
Comparison with the decline of other US industries faced with cheap imports are ridiculous and not analogous. Airlines are a service industry. If Lufthansa wanted to start a base in Atlanta and serve the US domestic market, they would employ US citizens in Atlanta and US citizens to operate their aircraft.
It is time to wake up and smell the coffee. The airlines are robbing you and are bribing politicians to protect their ability to do it. Political pressure is your only hope.
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