Allow any state to subsidize only specific essential air service routes rather than to operate a state airline. No taxpayer should have to subsidize white elephants like Sabena or Swissair. And likewise, no taxpayer should ever have to subsidize the losses of any private airline.
Personally, I don't have a problem with big salaries and big bonuses for employes of private airlines. But I do have a problem when US taxpayers have to fork over $5 Billion Dollars in free cash to companies like UAL, AA, and DL whose senior pilots and senior managers are highly overpaid.