[Butch Cassidy Slept Here]

As was noted, heavy regulation is probably counter-productive. As I've noted, previously, establishing a government-supported airline (ie: Air Amtrak) could force positive change on the part of existing airlines through government competition.

A government-supported airline would not have any intention of making a profit--merely containing losses. Service could be limited to flights between secondary airports (ie: Newburgh, NY to Long Beach, CA) to allow a competitive advantage to the existing airlines. Pressure, to force the existing airlines to clean-up their act, could be imposed by the government airline having polite ground and cabin crew, reasonable refund policies, and a decent seat pitch (35" ?) throughout the plane.