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It is a tough one but I do think the niche carriers are the best hope- Westjet's fleet upgrade is the centrepiece of their new marketing campaign. Their one-class cabins are roomier than cattle class but they still position themselves as a discount carrier. Your point about Southwest loading up quicker is another good example of how airlines should to find something that the customers would value enough to pay more than rock-bottom. Virgin Atlantic is another good example of finding something that is more appealing than a low price.

I do believe it is possible to improve things because of what's happening in retail; nobody can undersell Wal-Mart so most of their competitors have decided to try delivering something that WM cannot, which is a pleasant shopping experience.

It is a tough one but I do think the niche carriers are the best hope

I agree with you completely. People want different things from different flights. The family of 4 who is off to a vacation destination wants the cheapest flight. So what if the seats are cramped - the adults can spill over into the kids' space.

The business person who is flying cross country at company expense will pay more for extra leg room, an Internet connection, and some refreshment (even if that costs extra)

The person who is flying Internationally, with several connections (like Steyn was describing) really does want room and service.

I don't think one airline would find it profitable to have so many different configurations and employee levels. Right now, they all seem to be catering just to the family vacation - the cheapest ticket, period. Some flights don't even have business and/or first class options anymore.