Am I being overly simplistic in suggesting a relatively straightforward solution to this dilema... at least in part ?
Put the bl**dy fares up !
Why should people expect to go coast to coast or trans-atlantic for a few hundred dollars... ? raise the cost of a ticket... fewer people will fly, fewer costs to the airlines (inc fewer pilots) ... better standards of service and comfort to those who do fly... less hassle at check-in and security gates, better salaries for airline staff ( inc pilots ) better standards of safety...
Let the public pay for what it wants.. who knows... flying as a passenger might even become pleasurable again. In the terminal I might feel less like I've become lost in a trailer park and on the aircraft I might not feel as though I've mistakenly boarded a greyhound bus.