> I meant just in terms of number of airlines, we are worse off.

Ok, but why do you care how many airlines exist? Competition?

Guess what? There was a larger number of airline CEOs, and... less competition! Airline profit margins were fat back in the day (isn't excessive "producer surplus" supposedly a sign of a non-competitive market?).

Not only did the government set the maximum and minimum price an airline could charge, but all routes had to be approved by the government. Airlines who served a particular route were even allowed to protest when another airline petitioned to offer service on that route, and "too many competitors" was considered a valid reason to deny an application.

The reason we have so many fewer airlines today is that some airlines outcompeted others after airlines were finally allowed to compete for customers. One of the things that nobody likes to talk about w.r.t. competition is "what happens to the competitor who got out-competed?"

The answer is: He exits the market (goes bankrupt or gets merged into another competitor). This happens one-by-one until the number of competitors has been reduced enough to achieve a stable market equilibrium. That equilibrium is achieved when the number of competitors is sufficiently small to give the remaining competitors "pricing power" to maintain reasonable profit margins (and thus not go bankrupt).

> Oh, and service quality. And comfort in flight.

Right, when the government makes it illegal to compete on price, you have to compete on other things.

You can still get that old-school level of service and comfort today. It's called first class, and it's great!

They do all sorts of wonderful things, like offer a glass of bubbly before takeoff, halfway decent food, loads of legroom, wide seats for our fat American butts, a couple free checked bags, and flight attendants who act like they give a damn. Most of that wasn't included in a domestic economy ticket back in the old days.

The best part is that modern domestic first class still only costs about the same as an old-school economy ticket. But it turns out that what almost all customers really want is the cheapest ticket possible. Their revealed preference is that they prefer lower quality, no checked bag, and cheaper prices. Airlines who offered this option survived and those who didn't perished.