Gaunty,
All good points, especially the telecom issue. What a real disaster!
Yet I doubt many would say that Southwest and Jet Blue are disasters. Lumbering great dinosaurs like USAir, PanAm, Eastern United, Delta etc etc (and their bloated pension schemes) were only ever propped up by the CAB and "cost-plus" airfares and are now propped up courtesy of the banks and the ever dwindling shareholders funds, a situation which cannot last much longer.
Its not a case opf black or white, regulation or no regulation. If the industry is not effectively contestable...due to infrastructure constraints or monoploly power or economic regulation...the consumers and jobs suffer. It is that simple. The fact that governments have stuffed up both the infrastructure and monopoly issues doesn't mean it can't be done.
The truth is that it is only newcomers (or the threat of them) that change the industry for the better. Keeping things the way they were in the name of stability or maintaining current salary levels is a fine high-minded goal...but it does involve a net transfer of income from consumers (and potential employees) to those currently employed by the "Legacy" carriers. The fact that this subsidy is not readily visible doesn't mean it's not there.
Right now if you and I had the money (and were perhaps foolish enough) we could invest $100 million and start a factory exporting boots, or engines or indeed almost anything else to the US. What we CANNOT do is lease a couple of B777LRs and try our luck on the SYD-LAX route. Exactly in whose interest is that?