Fluke Skywalker -
There is already a well known airline flying scheduled services with a full service at prices that compete with the LCA's prices - Monarch Airlines. In fact, they even offer free entertainment as well as a three course meal with wines etc on the short-haul sectors they fly to on their scheduled service (albeit only to 6 destinations from Luton and 3 from Manchester). It is an excellent product with excellent loads and a lot of repeat business (hence their frequent flyer scheme).
However, this kind of service extends only to holiday destination airports. That is a shame. I think there would have be a wider market there beyond holiday destinations for the airline who was willing to do it right before the no-frillers appeared in the UK. Neva mind! <img src="cool.gif" border="0">