yes competition will reduce prices as they compete against each other until levels where there will be no profit created, but when there is regulation involved the prices will have to go up to cover costs elsewhere, if they say you cant charge $25 to check a bag in then they will just add that to the ticket price as that helps cover the costs, and for those who dont carry check in bags that is an extra $25 they have to pay, regulation in some instances will increase the price of the good or service
what i meant by lack of aircraft was it takes time for the actual planes to be made and at the moment there isn't the supply of planes that would meet that demand unless they use older planes which will have more maintenance issues and then competition would be thrown out of the window as people wouldnt want to fly that airline for that route, boeing and airbus are backed up and other airplane manufacturers may not meet the standards or demand of the airline
the logistics of the BA flight from EWR/JFK to LAX doesn't make much sense, that is why they have a LHR to LAX flight, otherwise they might as well set up a second airline like virgin america and hence they would need more planes to fly which there may not be in supply of or they would have to cut back elsewhere
the idea is good but it isn't possible
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